Haunted by the German boat, and ghostly apparitions all over the place, the crew have little choice but to hide in the depths of the ocean. They chose not to fire on the enemy ship earlier, so either they have forgotten that they still have some torpoedoes, or I missed the bit where they say they don't work anymore.
With things falling apart and sabotage or weird coincidences not helping the cause, they are hit by depth charges and grappling hooks, while their hydrogen levels rise and, with nothing else better to do, Claire decides to dig around to find out what happened to the Captain - who isn't on board any longer.
Odell is sent to fix an oil leak outside the sub with one of the officers, the crazy guy who is scared of women and the funny dude from the Hangover. The officer has an ulterior motive to murder Odell, for no apparent plot reason, and tells him what really happened -- Brice and the others wanted to save the survivors before, while the Captain told them to murder the survivors. There was an argument, and the Captain fell overboard and hit his head, never to be seen again.
At about that time the officer sees a ghost on the metal wall and falls to his death, hitting his head quite badly in the process. The other divers panic and get back inside the sub.
They argue about their next move. Brice wants to wait it out, while Odell thinks they should head for England. They are still stalked by the German boat.
With hydrogen levels dangerously high, 'Chief' locks all the hatches - until one of the jokers opens one to ask what is up as a spark from Chief's lamp ignites the gas and takes out most of the sub. Most of the crew die instantly (even though they were in sealed sections? Anyway...)
With just the crazy guy, Hangover dude, Brice, Loomis, Odell, Claire and Kingsley left, they put on oxygen tanks and explore the charred remains of their crewmates. Loomis is overcome by his reflection in the mirror, rushes out through an escape hatch, and is impaled on the sub's railings.
Finally Claire pieces it all together, but it might be too late.
The sub manages to surface. Kingsley is next to die when a hammer plants itself in his face.
Brice holds them hostage with a gun, when sonar picks up a ship nearby. Claire escapes to the top deck to attract their attention. Brice gets outside to confront her and owns up to it all -- Brice ID'd the wrong ship - and they fired on the English medical boat, thinking it was German. The Captain wanted to take in survivors, but to hide their mistake, Brice ordered them to shoot on the survivors in the water, and kill the Captain.
Brice then shoots himself (twice!!) in the head. Takes some doing to survive the first shot to the brain to be fair.
The other ship leaves, but sends up a flare.
Later, the remaining crew are rescued. The crazy guy apologises to Claire. Odell says he isn't sure what to write in his report, Claire thinks he should leave in the bit about ghosts, just to add to the drama. Meanwhile they watch as the submarine sinks to the bottom of the ocean, and rests next to the broken English freighter.