There is no logical reason why a witness from 1,000 years ago would be less reliable than a witness today. The difficulty is there is no opportunity to challenge the historical witness directly.
this. THIS!
THIS! 
I'll go a step further.
In the case of sea serpents, there are good reasons to say that a witness from, say, 1,000 years ago might be more reliable. Not more honest, or more dispassionate, but more
reliable.
1,000 years ago, a ship might be 15 to 25 metres long, powered by sail, and with a maximum speed in ideal conditions of 6-8 knots. Every member of the crew would be directly involved in in keeping the ship going. The helmsman would be standing on deck directly exposed to the wind and spray. In heavy seas, they would literally be watching and responding to each individual wave. The crew might be rowing, or hauling on lines to control the sails. Space down below would be very limited and often uncomfortable. The result is that at any given time, there would be several experienced crewmen on deck or up aloft, paying direct attention to the water conditions around them.
Navigation was by dead reckoning, direct observation, and experience. Looking for land beyond the horizon? Look at the colour of the water, look at what is floating in the water , look for birds in the sky, look at the cloud formations. The secret was constant observation, based on familiarity with what to look for. A sailor's life depended on every member of the crew knowing the marine environment intimately.
Today, a cargo ship may be 400 metres long and average about 14 or 15 knots. The helmsman is in a covered bridge, and may not have reason to glance out of the window for long periods. Navigation is by satellite, with digital charts on a screen. The other crew members will be on deck only when needed, otherwise they are likely to be working down below, or in their quarters watching TV, reading, etc. There is no need for a typical modern merchant seaman to have any particular knowledge of sea life, cloud formations and so on. Of course, some do, but many or most could equally be working in a factory or office. Even the specialists would know more about technology than traditional seamanship.
So when a sailor from 1,000 years ago saw something unusual, you can be fairly sure that it was genuinely unusual.
But when a modern merchant seaman, or indeed a passenger on a cruise liner, seems something unusual, it may only mean that it was outside their own personal, limited, experience.
I have two small boats:
- One is an inflatable with an outboard motor, capable of about 17 knots. Skimming across the surface of the water is noisy and exhilarating. Currents and surface conditions present no appreciable obstacle or hazard, within sensible limits.
- The other is a sailing dinghy designed for cruising, which is capable of 5 knots in ideal conditions. I have to watch the water and wind and make constant adjustments to the sail and to my course. Even a slow river current or a choppy area of the lake needs to be approached with care and "tactics".
I certainly notice a lot more detail in and on the water when I'm sailing than when I'm on the inflatable.
My own sea serpent story: Just once, on the sailing dinghy, I encountered a grass (edit) snake swimming across Rutland Water. I noticed it swimming towards me. It literally collided with the side of the boat then swam away. I would probably not have noticed it if I'd been under power.
