sailors also reported seeing kraken as well, they were eventually proven right with the giant squid.

Exactly, that's the point : if it's true/right, we are now able to prove it with evidence. If it's not, suddently we don't see it anymore.

They reported seeing a lot of other things as well. Rationalizing that as "they were right about big squids existing" is a bit of a stretch.

It wouldn't have the same appeal if they reported seeing "larger than average size squids we didnt know existed". Every story was embellished in a world without pocket cameras. And the further you go back, the more grand the fiction was. Tales of men splitting the sea and walking on water.

It is all very highly entertaining.