Let's not assume that only ships that burn to the waterline have casualities.
The Falklands were good for the Royal Navy in the long run. It was their "damage control is very important, you idiots" wakeup call; their damage-control technique was a farce and their shipbuilding defective at best. (It's interesting when you consider the USN had their own particular wakeup call with the loss of the USS Lexington in WWII; but apparently it takes a major shipboard fire, and the RN hadn't had one of those until the Falklands. Also instructive to consider what happened to the USS Stark, which took two hits from the same kind of missiles.) And were the same thing to happen now the results would be much different, as the RN learned its lesson. Their damage-control technique, particularly for fighting fires, is among the best in the world today, and they've stopped building ships out of flammable aluminum and plastic.
On the original topic, this sounds pretty crackpot to me. Here is my best guess on how this happened: My interest in naval history means that I know that the Exocet which hit the Sheffield didn't actually go off. The manufacturer couldn't figure out what went wrong, and didn't for another five years, so they went back to the drawing board on the fuzing mechanism.
Somebody heard the missile didn't go off and that the manufacturer couldn't figure out why, but missed the memo about them doing so five years later, and came up with this crazy theory. However...
The Exocet series of missiles are almost as common as dirt. They can be launched from just about any platform imaginable, from helicopters to ships to off the back of a truck, so there's lots of flexiblity, and they're relatively cheap compared to higher-performance antiship missiles like the US Harpoon or Chinese Silkworm, while offering effective antiship capablities, unlike the even cheaper Russian Styx. They have a huge market share; probably equal to that of Russian-made weapons, perhaps even greater. This is big business, and worth tens if not hundreds of billions. I severely doubt that any such codes existed. I further severely doubt that even if they did exist, the manufacturer would have revealed them to the French government even under duress. Compromising their product in such a manner is nonsensical.
