1) Decals stick better to a glossy painted surface than to a flat painted surface. If you have used a flat paint, you may want to use a glear gloss. Use a paint which is compatible with plastic and the brand of paint you painted the model with. Future acrylic floor polish is also commonly used. You can brush a thin coat in the area where the decals will go. When the gloss paint or Future is dry you can apply the decals.
You can seal the decals down now with some clear flat paint - or if you intend to weather the model, use a clear gloss like you did with the decals. The gloss will allow you to remove mistakes easier than from a flat paint. If you painted the model with enamel paints, use water-based acrylic paints to apply your weathering (or vice versa). Apply a wash to weather a little at a time. It is easy to add more. If you make a mistake you can wipe it off. The gloss-sealer helps you do that.
When you are happy - an overall sealer coat (flat?) will seal in your weathering and allow you to handle the model without the weathering coming off on your hands.
2) Here are a couple of articles on making water for dioramas
http://www.steelnavy.com/water.htm
http://www.steelnavy.com/Whitewater.htm
http://www.steelnavy.com/WavePatterns.htm
How do you want to model the torpedo? Do you want it just coming out of the tube? Do you want it just entering the water, or running along in the water? If its just coming out of the tube or just splashing in - you may not need to model the whole torpedo. Use a piece of wooden dowel of the appropriate diameter and sand the nose or tail shape. Make fins out of cardboard or plastic sheet. You can purchase resin torpedos from companies like White Ensign Models.
If you want to do your torpedo running after it has splashed in you can still use a wooden dowel. You may be able to do it with some cardboard - since the torpedo will be imbedded in the water. Part of the fun is engineering a solution that works for you.
Remember you are modeling for yourself. You do not have to make anybody but your harshest critic - yourself - happy. Do the best you can. Make yourself happy in your modeling efforts.
3) I posted the link to how to post photos in an earlier response