Correct on all counts. It was a midget sub that surfaced in the lagoon. The Japanese sailor was played by no one other than Vito Scotti, heavily made up.
The volcano, like much else, was “on the other side of the island.”
Things like radioactive seeds and silent movie equipment were not only washing up in the lagoon all the time, they kept falling out of the sky too. Everything from a robot to a tub of French Vanilla ice cream. Apparently there was a lot of air traffic going overhead at the time, but nobody ever noticed the distress signals.
People have done a lot of fanwanking to explain things like why the Howells had so much luggage and money with them while they were supposedly just going out for a three-hour tour. It makes some interesting reading.