The Rocket Squid is found in the third level, Deep Sea, when you go down inside the ruins. You will take a right hand turn and then soon after you will see a pot that is moving around a bit. Throw an object at it and the squid will take off through hole in ceiling. Quickly snap a photo of it and the achievement is yours. See video below:
One important thing to note is that all special items do not show up until after you play a level 2 or 3 times. Just play each level a few times focusing on taking pictures of sealife before you worry about looking for special items.
There is also another path through the level that will take you over the ruins instead of going down inside them. Whenever there is multiple paths, you can choose which way you go by holding the right stick (or d-pad works too) in the direction you want to go when you get close. In this level, to go inside the ruins, you will want to hold down on the right stick when you get close to the entrance.