From what I am playing so far in thief 3, it seems like you cannot blackjack/stab people unless your close enough behind them to raise your arm arm. If it is not, then they tank the hit. Problem is Garret will lower his arm at times. Other times he wont raise his arm to attack at all. They just take the hit instead of going down.

Also, Garrett will not raise his arm to blackjack/stab people if they are looking for you or investigating a noise. So you have to wait for them to chill out before the game allows Garrett to raise his arm and strike.

Also, you cannot blackjack to death anybody who is aware of you. In the last games, it took 20 wacks, but they eventually go down, which was good because you at least had an option to silence that person if you were caught. Now, you either have to knife them dead, or try running and hiding. No chance to incapacitate them until they cool down.

Last, getting up close behind people who are walking when you are crouched seems to be impractical, as your crouch walk speed seems to be the same as their walk speed. So to get up close and knock them out before they turn around, I have to compensate with standing up and running for part of it, which results in them sometimes hearing and turning around. Would the game get too easy if I adjusted the speed?

Am I wrong about these things? Are these modifications to the game with sneaky upgrade patch? Do I just suck, and need to adjust to the games mechanics? Need help.

You can shoot a moss arrow to someone's face and they will choke on it for a while, which should allow you to escape, and maybe to blackjack them (not completely sure if you can when they're in that state).

Flash bombs are another way to temporarily neutralize an enemy.

In unmodded TDS you can't really blackjack manually like in T1/T2; Garrett auto-raises his arm when you're in the right position, and then pressing the button gets you the knockout. (It's seemingly impossible to blackjack anyone who's seated, although I've read that some FMs fixed that.) The TDS implementation of blackjacking just isn't very good, I'm afraid.

I see the optional Sneaky Upgrade tweaks include 'Disable auto-raising of the blackjack and dagger' but I haven't tried the mod so I don't know how much it changes.

The disable auto-raise in Sneaky Upgrade it's just a visual tweak that disables the animation but doesn't affect the range of the one-hit/stealth attack nor fixes some of the issues with it. In my case I disable this feature as it only makes stealth more annoying as sometimes the game even in the correct distance would fail to register a proper blow so the animation serves as a visual cue of when the hit will actually land.