The Piretess Mirabella will really start this quest (be sure to have Mirabella MOD that repairs this issue or 1.6.5 patch first you start this)
Than find another ship - talk to it's captain (on the same map as Mirabella) he will lead to you to the Kraken (you will know that you are there, when the other ship is sunken down by "something" - guess by what
)
Kill Kraken, Kill James and marry Mirabella to get +100% attack to pirates