Do you have the newest version? And did the prisoner lamia offer to help you if you found the key?
102. Return to the main path and continue to follow it right until the 3 wells. Ignore the stairs that Random’s party ignored. When you get to the wooden section of the Ice Bridge, Xander speaks with Random, quest complete. You need a strong rope. Head back to the stairs I told you to ignore and go down; it’s the Lamia Nest. This is tough; some groups of Temptress and Medusa are 8. When you have cleared the first area, go down. The small cave to the right has a Gorgonite. The large cave to the left has first a Gorgonite and then a Gorgonite plus Ground Fish. Go down onto the green area. The indent left of the plants has 3 Luck Starfish. Left again is an imprisoned Lamia; Xander has a better idea, get the Lamia to help; but that means finding the renegade with the key.
103. Exit and return to the area of the Oghmore colony. Go right onto the next screen and work your way right and up. Go up the stairs to an island. Go right and up to defeat the Metal Legs and Lamia to receive the Lamia Prisoner Key. Go down the stairs and left for a green chest with the book: Ocean’s Vacation. Go back to the imprisoned Lamia, free her; quest complete. Return to the bridge; quest complete. Return to Kondler
According to this walkthrough, it's a lamia with only ONE squid.
