I don't know what game setting your playing with but is sounds like you havent selected any vessel from the recognition manual.
First of all, select the right vessel in your recognition manual (when at periscope station it's the one next to the periscope depth icon... I think, the book).
Depending on the type of vessel (being a war ship or a merchant) select the appropriate book, turn the pages and select the vessel you think our looking at.
Press the check mark and you'll see the class name of the vessel on top of the TDC, now can you measure distance by way of LukeFF's drawing.. might need some AA adjustment on that drawing Luke
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You can check the distance measured on the attack map when you press the PK (being the red button under the torpedo depth setting) scroll out and move the chart to the vessel then scroll back in you'll see a black marker line over the dot representing the vessel. If it's off you're just going to have to redo the measurement.
Go to this tread and DL the video tutorials for clearer explanation on how to get bearing and speed.
http://www.subsim.com/radioroom/showthread.php?t=108931