That is a good install location... Dark Waters adds nothing more than some improved graphics and configuration changes, so usually, there would no issue. However, one of the first things to check would be if you emptied the "Save" folder for the game after you installed the mod? That is usually found in the "C:\Users \UserName \Documents \SH4" folder. Delete the contents and try the game again. This does re-set your video back to the Stock setting of 1024x768, and other default settings that you'll want to put as you like them. A 2nd thing to check, though would not cause the C++ error, is the LAA, and make certain that it is properly activated. If the SH4.exe file is write-protected, then LAA will not "take", and no error message is thrown concerning that.
Other than that, when you installed the game, do you remember selecting the "DirectX v9,0c" and the "Microsoft DirectX Media Codec" choices on the install menu? You most likely did, since Stock is running OK, but double-check if you can. You could also try your video card driver. THEBERBSTER has all sorts of links in his signature, especially the
SH4 <> TUTORIALS <> HOW TO DO IT <> INFO <> DOWNLOAD LINKS -STICKY INDEX one, concerning rolling back and updating video drivers. This might be like throwing darts while blindfolded and drunk, unless someone else has a more lucid answer...
One last dart to throw, after being spun around by a certain someone, is to remove all mods, then copy the insides of your "Wolves of the Pacific" folder, everything, and make a new folder in the "C:\Games \Steam \steamapps \common" folder, and name it like "DarkWaters", then paste the Wolves of the Pacific copy into there. Depending upon your computer and Steam set-ups you might be able to run it it from the SH4.exe shortcut in that folder. On my system, I have to start the Steam app on my computer, log-in, then use "Add a non-Steam game" to the menu, as mentioned in the Steam Article
Add Non-Steam Games to a Library. This will add a shortcut to it to your Steam menu, and after that, you can also create a shortcut to it on the desktop. The Steam Menu will recognize it as sh4.exe, so you'll probably want to change its name, which I usually name mine after the mod. You would also want to incorporate
MultiSH4v1.5 to the mix, so that you can name a different "Save" folder name, such as OMD, which is what I did, so that I know its an OpMonsun Dark waters "Save" folder...
