Hi Mr J,
You are not alone in suspecting that some kind of pathology is responsible for the bizarre appearance of this ammonite. That's what people thought when they were first recorded. However, since then, many more have been found, both in Japan and in America. They appear to be a species and are regarded as such.
Actually, not to downplay their silly potential, but they are a lot less shocking when compared to other heteromorph ammonites like this;
and this, a loosely helically coiled form;
Nipponites is thought to have evolved from something along the lines of the latter type.
There is further discussion of these weird critters at
The Octopus News Magazine Online, a great site for anyone crazy about cephalopods.
Clearly, any designer who could create this animal, which looks like nothing so much as a dog turd with tentacles, can only be regarded as very silly indeed.
Mutate and Survive
"A curious aspect of the theory of evolution is that everybody thinks he understands it." - Jacques Monod