Yep, and you can read the whole sad story at http://en.wikipedia.org/wiki/HMS_Thetis_(N25) She has the questionable destinction of being one of only two submarines to be sunk twice...once on trials, and for the last time in combat. The other was the H.L. Hunley which actually sank several times. (The learning curve for submarines is a steep one.)
Yes I've heard of the Thetis sinking as well. I live in Llandudno in North Wales and the Thetis sank for the first time about seven miles north of the Great Orme's Head. From what I have been told it was quite clear to see from the slopes of the Orme.
As it happens the man who tought me my trade as a Boatman was the cox of Llandudno RNLI Lifeboat and as a younger man was on the crew of the boat when the Thetis went down, so they were called to assist. He told me about how just the stern was sticking out of the water and how the men board were hammering the hull trying to attract help and how that hammering slowly got quieter until eventually there was nothing. Help was only the thickness of the hull away but at that time nothing could be done to save the sailors and Cammel Laird workers who nearly all perished. There were a few survivors who used on board lifesaving equipment but as I recall there was only enough for a few, and I think it was 99 killed.