Welcome to the GWXperience subdude
Here are the installation instructions from the GWX website:
Basic Installation
You must install The Grey Wolves Expansion (GWX) over a CLEAN, UNMODIFIED installation of Silent Hunter III patched to Version 1.4b since the installer will only install GWX into your Silent Hunter III installation folder. The following instructions may apply to you depending on how you have modified Silent Hunter III:
1. REMOVE any installed SH3 Commander files (if you use SH3 Commander) by pressing the "Rollback SH3" button from within SH3 Commander;
2. You can use JSGME to activate other modifications after you install GWX, but not GWX itself;
3. GWX is a full/general release that completely supersedes all previous versions of “The Grey Wolves” and GWX.
a. Uninstall Silent Hunter III via the MS-Windows “Add/Remove programs” feature
b. Open Windows Explorer and:
i. *delete* the folder from where Silent Hunter III was just removed
ii. *delete* the “\My Documents\SH3” folder. GWX V2.0 is incompatible with non-GWX
save games and is likely incompatible with games saved under previous GWX versions.
c. Reinstall Silent Hunter III;
d. Install patch V1.4b if your version of Silent Hunter III was an earlier version, ensuring the
patch version corresponds to your source media: Download, DVD, EMEA, or US);
Good Hunting