From what I knouw about DW AI, seawolf at 35 kts can mean two things. He's evading torpedo, or sprinting toward to investigate KNOWN target. It's bit too fast, he sold himself out, at such seastate with Kilo's poor sonar you should have little chance. But he knew about you in the first place, or the surfaces did and told him, which is quite a possibility since Kilo is damn quiet, and even Seawolf can hit it with such seastate without noticing it first (happened to me once).
As for the torpedoes, you was quite close, could be wrong depth settings, late activation. Play the mission again. Find it out.
And oh yeah, LWAMI is a must. Some campaign missions are impossible to meat sometimes, so try to start them over.
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