The segmented body is already there, it definitely looks more insectlike than serpentlike from your most recent pic.
I think I realize what bugged me about the current state. It's a mix of 2 fundamentally different parts of the animal kingdom.
Invertebrates with exoskeletons (like your current segmented body and many legs suggest) don't have a horizontally hinging jaw and mouth like vertebrates (snakes) do. They have suckers, vertically hinged mandibles and multi-element mouths where there might be some large grabbing appendages out front and crushing elements within the head. I also think the huge eye thing would look way scarier and more deep-sea-alien-looking. Antennae also look awesome, and are a common feature on insect-like things.
Think about the business end of a lobster. Multi-element feeding apparatus, weird-shaped pointy chitonous face, eyes on short eyestalks, large antennae
If you're going underwater insect-like appearance, remember everything is segmented on some level. It's how exoskeleton animals work. Every joint in the leg or arm is a solid cylinder of shell, joined to the next by a membrane. Look at the lobster claws in the 2nd pic, and the centipede's legs. On something like a centipede the distinction between shell and membrane isn't always stark but it's very visible on a lobster. Segments always seem to narrow toward the membrane joints too.
This post has been edited by cerveza_fiesta: 02 February 2012 - 02:46 PM