If you just installed SHIII I think you don't have duds checked as ON by default, so make sure those "failures" are not due to a bad AoB at the time of impact... those gave me headaches as well! take a look at the event camera and see the angle at which your eels are hitting (also, too low would be a problem as well, since the lower part of the ship's hull would bounce the torp off, a good advise, follow the torp on its way to the bottom, if it explodes, it wasn't a dud).
And YES, there's a way to change the realism on the Single Missions screen
If you do it from the Campaign, just go in there, change realism, and return to Main Menu
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