Basically, the mod devs used multiple tga files for the wake, instead of the singles as in the Stock game. If you have a regular SH4 install on your computer, navigate into the Game folder, "Data \Misc" folder, and copy the "Wake_Back.tga" file and paste it over the KSDII version in the same folder. It looks like that file is not correct in KSDII. Then delete the files "Wake_Back_Sub.tga" and "Wake_Front_Sub.tga". You could probably also delete the "Wake_Torp1.tga", which appears to be a "darker" version of the game's similarly named file. You will lose the intended effect the mod devs were trying for, but at least the wake won't be all over the place.
I am not certain that is what Kal did, but he even said he's not sure... lol - it would be a good idea to backup those four files to a "safe" place on your hard drive, just in case...