Ancarotaur

Keep the initial description down to about 3 or 4 sentences. Your players will ask for clarification of more details when they need them. Don't focus too heavily on the minute specifics of its appendages and specific features - save it for when it starts doing something....
then you can describe its tentacle as it begins a melee attack,
... As you are drawn deeper into the morass of thrashing limbs you see... (then you can describe the face and mouths in a bit more detail)

Its better to focus on overall impressions (e.g. giant rubbery starfish with many long barbed tentacles).
What I find more important is describing what it is doing and how it is moving, as well as more ambient things like what sounds is it making, and what it smells like.

While you never want to tell your players exactly what their characters are thinking - its worth keeping in mind that an Obyrith Lord, by its very nature, exerts maddening effects upon the minds of most beings that behold it, perhaps even subtly warping the fabric of reality around it.
Does being in its proximity make the character hallucinate or feel sickened and confused? Do they hear vague whisperings or buzzing in their heads? Do they find it difficult to concentrate upon how many shifting limbs the horror has - and find that their attention starts to spin and waver every time they try to count the curling tendrils? Are they struck by a strange and unexpected emotion - calm? lust? despair? homesickness? Can you actually see it that clearly anyway, or is it glamored beneath a misty haze - or appearing slightly out of synch with the normal dimensions?

Obyrith Lords are primal manifestations of basic fears and the horror of the unknown and inexplicable. Obox-ob, for e.g., is the deep-seated revulsion evoked by parasites and insects, Dagon is a primal fear of the ocean, Pazuzu is fear of being harassed by scavenging vultures in the desert. Depending upon the player's race and abilities - its generally very difficult for most beings not to become caught up in such evoked feelings and impressions when in the presence of an obyrith.

That depends on how Planescapey your campaign is. If it is really homebrewed then you can just make up what you like. Just read Fiendish Codex 1, and if the descriptions and outlook of Obyriths fits with what you are going for, then go with it.

Assuming that you are following the rules closely and use the Great Wheel cosmology though...
1. Obyriths are exemplars of Chaos - embodying and manifesting the chaos of the Abyss itself. If that doesn't fit then it isn't a demon.
2. If it is a demon, what role would an Ancarataur play within the Abyss? Where does it live?
http://wizards.com/default.asp?x=dnd/we/20060620a Laghathi are very primitive octopus critters that live in the Styx and are too primitive for the tanar'ari to have systematically exterminated. Maybe it is like a really epicly giant version of this.
If Ancarotaurs are Obyriths, then they need to be somewhere really remote, or really really hostile to the tanar'ari - who tend to object to giant tentacled obyrith horrors from the dawn of time and eradicate them wherever they can.
I.e. why haven't they been wiped out by the tanar'ri?
Perhaps they live in service to one of the surviving Obyrith Lords like the Queen of Chaos, Dwiergus, Ugudenk or Dagon. Layers still controlled by Obyrith Lords are generally pretty inaccessible to tanar'ri, and are home to that kind of creature.
3. If none of that seems to fit, then it is probably an untyped demon or possibly even a really strange kind of tanar'ri

"If I make them Obyriths can they still be simultaneous hermaphroditic outsiders?"
I don't really understand the question. Obyriths are outsiders anyway, and they are really alien in form so having hermaphroditic reproduction is perfectly feasible.

I would suggest starting with the appendices at the back of the Monster Manual 1 on advancing monsters to different sizes and allocating appropriate CRs. It would be really helpful to pick a template monster already statted out and just modify it to suit your purposes with templates and HD advancement and modified abilities. You might be able to adapt Lagathi this way,
otherwise off the top of my head there is already a fiendish echinoderm monster in Stormwrack called an Echinoloth. It might give you somewhere to start. There is also a similar shaped non-fiendish monster that might give you some pointers too in Lords of Madness called an Overseer beholderkin.

Mostly FC1 will give you a feel for their background and history and role within the Abyss, and relationship with the much more prolific and influential Tana'ri demons. It also details and stats out 4 of the surviving Obyrith Lords and gives you a good idea of the within-game mechanics of their insanity effects. Its also good because it has feats and spells for mortals who are effected by or in the service of Obyriths.
Dragon Magazine 359 - details the Lords Ugudenk and Dwiergus. There is an article somewhere in one of the Dragons statting out the Queen of Chaos too.
Monster Manual V - has a new obyrith species called the Draudnu, that serve Pale Night.

beyond that is non-canon homebrewy stuff.
Green Ronin's Book of Fiends is totally awesome, but because it isn't WotC they call their obyriths qlippoths. They are pretty much the same beings though just with a different name due to trademark reasons.
... and naturally read heaps and heaps of H.P Lovecraft.

hope that is helpful