This is a review of the first hardback edition from 1977, which is currently available at The Internet Archive.
This is a sequel, of sorts, to the series' first book, Serendipity. And the pinkest sea monster who ever lived does make a substantial appearance. The series was originally supposed to be about Serendipity, but then life (or lack of any plot ideas about sea pollution) got in the way.
There aren't a whole lot of human beings in the Serendipity series. Smudge was perhaps the most interesting of those humans. His problems start because he didn't listen to his father -- which seems kind of an odd thing to mention, since Smudge was a grown adult when he got his leg bitten off by a sea serpent.
And then the other fishermen set fire to his wooden leg. Now, that would piss off Mister Rogers, let alone a cranky seaman. So, Smudge gets revenge by polluting the fishing waters of his enemies.
The late, great Robin James did a decent job in this early work, but she either didn't read the text or took some liberties. Smudge didn't look that dirty, and Large Marge (who always fished for crab) looks like the older sister of the Princess that befriended Morgan the Unicorn in later books.
The bird on Smudge's shoulder is called a mudlark. That's usually the nickname for a magpie, not whatever that bird was supposed to be. Unless that's supposed to be a special Serendipty species.
The set up was great, but the ending was trite and so sweet it made my teeth ache.