Genes are organized in functional modules (or pathways), thus their action and their dysregulation in diseases may be better understood by the identification of the modules most affected by the disease (aka disease modules, or active subnetworks). We describe how an algorithm based on the Core&Peel method is used to detect disease modules in co-expression networks of genes. We first validate Core&Peel for the general task of functional module detection by comparison with 42 methods participating in the Disease Module Identification DREAM challenge. Next, we use four specific disease test cases (colorectal cancer, prostate cancer, asthma, and rheumatoid arthritis), four state-of-the-art algorithms (ModuleDiscoverer, Degas, KeyPathwayMiner, and ClustEx), and several pathway databases to validate the proposed algorithm. Core&Peel is the only method able to find significant associations of the predicted disease module with known validated relevant pathways for all four diseases. Moreover, for the two cancer datasets, Core&Peel detects further eight relevant pathways not discovered by the other methods used in the comparative analysis. Finally, we apply Core&Peel and other methods to explore the transcriptional response of human cells to SARS-CoV-2 infection, finding supporting evidence for drug repositioning efforts at a pre-clinical level.