Actually, the Germans did use the "submarine" Mk III operationally, just not in the origional configuration and not for the origional operation. If I remember correctly, as origionally designed and built, the intake and exhaust were long hoses with a buoy at the ends to keep them above the surface of the water (I seem to remember that they were supposed to be operated to a depth or 15 or 20 meters). They were modified for Operation Sea Lion (the invasion of the British Isles) in 1940, which of course never took place). They were modified in late 1941 by replacement of the hoses with vertical metal tubes (allowing for use in water up to a depth of 5 or 6 meters I believe). I believe they were issued to the 5th Panzer Div and used to cross rivers w/o bridges or fords on the first days of the invasion of the Soviet Union.
Sorry about being so unsure of the information, but I'm at work and don't have my resource material available to me.