re: When did the German soldiers of WWII realize they were the 'bad guys'?

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That was one feat of the Nazis. Germany literally imploded at the end of WWI. Soldiers and sailors mutinied, factory workers refused to work, country was literally starving to death. The blockade devastated the country and millions of soldiers were killed.

The Germans fought all the way until the end of WWII. They didn't quit, didn't collapse, they were just plain beaten into submission.

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Many people don't realize the extent to which the German experience in WWI shaped Hitler's thinking and policy decisions. He was hell bent to ensure that Germany could never be starved into submission again and this concern was a central factor in his determination to seize Eastern lands that could permit Germany to feed herself even in the instance of enemy blockades.

It also contributed to his convictions that Jews and others that were deemed potential subversives had to be rounded up and isolated to prevent destabilization of the home front. Hitler was obsessed with the concept of "will" and was convinced that Germany's defeat in WWI was merely a product of the national will being broken internally. This contributed to the never capitulate attitude the Germans took even in the final days of WWII. This attitude was hammered into the German psyche from 1933 onwards and only intensified with Nazi wartime propaganda.