The launch direction of the torpedo is set by the -/+ adjustment. You need to carefully select your firing angle as the units involved in the different scenarios were not able to re-load at sea.
The spread is needed when you launch a Torpedo salvo, it will increment the direction of the torpedo one by one.
You set the target at 260 and the spread is 3 degrees.
The torpedoes will progress every turn at their speed and along courses. When they run out of energy, they simply sink. You can track the torpedoes on the map screen.