Seeing is Believing.
original image

Entry guide: step 1 of 4

Recreated the rest of the eye. Then warped it and applied a plastic wrap filter.
Took a nail and liquified it into numerous tentacles.
Entry guide: step 2 of 4

Lots of hue/sat. I created the water surface by:
Render/clouds, filter/plastic wrap, free transform for perspective. Then played around with hue/sat again.
Used a brush for the bubbles.
Entry guide: step 3 of 4

Decided just now that the image wasn't very dramatic so thought I'd add a bit of drama and made a killer tentacle from the girl's forehead.
Entry guide: step 4 of 4

Used the texture of the chair for the squid tentacle.
final result

| go to the peeking girl contest (full view) |
