1. when I was making the mod I was having trouble with zip files. The mod works if the merfolk folder is placed into mods folder unzipped.
2. Merfolk Settlers actually don't have the same name as the maskling settlers. Masklings are m_u_setter.xml and merfolk are m_u_settlers.xml.
I made it for 2.5.2 but It should work on version 2.5.2.1 as there wern't many changes
thank you for pointing out the file problem I'll update my post about that.