Well I got the missile shot and all that... I found the hammer..and there is a SUPER long passage through the ship which leads to a key I get the key and shortly after I drowned..is there something im missing? Maybe a place to come up for air?

When you are swimming in the ship there is a passage way to you right just as you see the hole to take you to the bow. If you go right into the passage and then left you will be able to go up. at hte top turn to the lock and smash it with your hammer. This should give you breathing room (pun intended... poorly placed, but intended).

- Law