I've left the "realistic sinking times" option checked since I started playing the game. In stock SH III I always found that ships sank far too quickly; most ships going down in about 1-3 minutes. GWX made it far more realistic in my opinion; ships sink much more slowly & don't break in half nearly as much as they do in the original game.
There's a mod that does enable the contact tails. Do a forum search for GWX Grey Contact Tails. The file says that it's for GWX 2.0 but it works fine with 2.1.
P.S. Concentrate your deck gun fire on the target's waterline or hull. This will do the most damage with the least expenditure of ammunition.
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