There is no direct evidence for the existence of the animal the McMenamins call “the kraken.” No exceptionally preserved body, no fossilized tentacle hooks, no beak — nothing. The McMenamins’ entire case is based on peculiar inferences about the site. It is a case of reading the scattered bones as if they were tea leaves able to tell someone’s fortune. Rather than being distributed through the bonebed by natural processes related to decay and preservation, the McMenamins argue that the Shonisaurus bones were intentionally arrayed in a “midden” by a huge cephalopod nearly 100 feet long. (How the length of the imaginary animal was estimated is anyone’s guess.) But that’s not all — the McMenamins speculate that his “kraken” played with its food:

The proposed Triassic kraken, which could have been the most intelligent invertebrate ever, arranged the vertebral discs in biserial patterns, with individual pieces nesting in a fitted fashion as if they were part of a puzzle. The arranged vertebrae resemble the pattern of sucker discs on a cephalopod tentacle, with each amphicoelous vertebra strongly resembling a coleoid sucker. Thus the tessellated vertebral disc pavement may represent the earliest known self‑portrait.

I guess a giant, ichthyosaur-eating “kraken” wasn’t enough. A squid with a stroke of artistic genius was clearly the simplest explanation for the formation of the bonebeds.

Mark McMenamin and wife Dianna Schulte-McMenamin of Mount Holyoke College have come up with their own theory: that it was an old cemetery, where a squid like none has ever been seen used to eat and throw its meals. Now, nothing wrong with that mind you – it’s as good a theory as any, but THERE IS NO CLEAR EVIDENCE TO BACK IT UP.

The McMenamins may believe in the mythical kraken, but University of Minnesota professor and popular blogger PZ Myers says the hypothesis is ridiculous:

"I love the idea of ancient giant cephalopods," says Myers. "But then reality sinks in: That's a genuinely, flamboyantly extravagant claim, and the evidence better be really, really solid. And it's not. It's actually rather pathetic."

"Let me explain something here," he writes. "This 'Triassic kraken' has not been found; no fossils, no remains at all, no evidence of its existence."

Fossils of octopuses are by far the most enigmatic and mysterious of all the ancient groups of cephalopods. Due to their delicate structure fossils of these animals are exceptionally rare, as the soft-bodied nature of the animal does not lend itself to fossilisation. They are so unusual that there is just one known from Illinois, one from France, a handful from Lebanon and a couple of jaw fragments from Japan and Vancouver Island. In almost three hundred million years of octopod existence, the fossil record currently comprises just eight species in six genera - our entire record would fit inside a suitcase! Very little is known about ancient octopus history, how they evolved and developed, or their lifestyle. [at the link] is a brief look at some of the theories surrounding them, the octopus fossils themselves and the sites they were found in. These ancient forms almost certainly do not represent a single line of descent.