Have you checked the "Damage Textures" box in the options screen - not only the one when you load the game in the Options menu, but the one in the options menu accessed via the radio on the shelf ( left of scren ) in the "office"?
I've found the Torpedo Damage x1.5 & x2.0 mod can be quite spectacular.
http://www.subsim.som/radioroom/showthread.php?t=110828