Continuity mistake: When Jack, who is tied up, skewers the coconut in the wide shot the coconut is vertical. However, in the close-up of the coconut, before he spins around, the coconut is horizontal. (00:38:40)
Super Grover
Continuity mistake: On the Dutchman, when Jones holds out the whip, for Bill Turner to use on Will, the whip's direction flips between shots, it faces the opposite way when Bill grabs it. (01:14:20)
Super Grover 
Continuity mistake: When Will hangs upside down, as he shouts, "Who wants it? I could do this all day!" his necklace dangles freely, beside his face. However, when Will is shot by the dart, the necklace is mostly tucked into his shirt.
Super Grover Continuity mistake: In the scene early on in the movie, where Lord Beckett and Elizabeth are talking, behind Lord Beckett you can see a man sitting on a seat suspended in the air by two ropes, apparently working on a ship or something of that nature. Then, the camera cuts to Elizabeth and when it cuts back to Beckett, the man in the background is gone, and the seat or ropes are no longer there either.
Continuity mistake: On the island, when Jack says, "Yes, it does. You're sitting on it," the compass lid faces away from Elizabeth, but in the next shot as Jack shoos her away, the compass faces her; and the rope changes position too.
Super Grover Continuity mistake: When Elizabeth walks over to the deck rail and notices Jack sneaking away in the long boat, her leather strap hangs from her left shoulder to her right hip, whereas in all other shots she wears it the opposite way. This is not a flipped shot - note Cotton's shirt tear. (02:06:25)
Super Grover Continuity mistake: When the monkey steals the cloth with the key drawing, Jack shoots him and the monkey drops it on deck. Before Marty picks up the cloth, its position on deck differs.
Super Grover Continuity mistake: When everyone is fighting on Isle Cruses, Jack is standing behind Will and he hits Will in the head with an oar. In the shot right after that, Jack is no longer standing behind Will. Will is reacting to getting hit so you know it was right after, and Jack wouldn't have time to move. (01:58:15)
Continuity mistake: After Beckett tells Will to get the compass, in the next shot of Jack aboard the Pearl, as he plots the map, things on the table - such as the compass, change position between shots.
Super Grover Continuity mistake: When the tribe runs after Jack Sparrow, as Jack passes the dog he says, "Good doggy," and the dog is wet, but in the very next shot the dog is noticeably more wet.
MasterChief3624
Continuity mistake: After Jack gets slimed by the Kraken, he says "hello beastie" and makes his last stand. When he poses with his sword towards the creature he is clean again even though there was slime all over his clothes and hair in the previous shot.
Continuity mistake: When Norrington, Jack and Will bang away at each other on the beach, in the shot facing Elizabeth as she puts her hat back on, behind her Ragetti runs ahead of Pintel (3-4 ft) as they steal the chest. Next shot, it is Pintel in the lead as they run off. (01:49:00)
Super Grover Continuity mistake: After Will slides down the sail, just as he grabs hold of the mast line, the cut sail is only tied down at its corners. After he puts the knife in his mouth, the sail is also tied down directly under the cut. (01:36:10)
Super Grover Revealing mistake: When Will, Gibbs, and the other pirates climb up the cliff's 90º rockface, their hair, jewelry, etc do not reflect the gravity which would naturally affect them, despite any wind.
Super Grover 
Continuity mistake: When the cannibal walks across the bridge and sees some prisoners fall to their death and the others escaping, there is a long stick, which has a black design on it, threaded through his lip. When he arrives back at Jack's roasting, the stick's design is very different. (00:36:10)
Super Grover Continuity mistake: When Will hangs with his hands bound, the ruffle on his shirt cuff goes up and down and up again.
Super Grover 
Continuity mistake: When Will, Gibbs and the rest are in the ball cage and escaping the cannibals, they roll down a hill and hit a tree, which they then roll up. This would be impossible unless the weight is evenly balanced throughout the ball completely. (00:37:50)
Ssiscool 
Continuity mistake: When Jack blasts the bird pecking on the coffin, the wood debris differs between shots. As his gun-toting hand still pokes through the hole, there is attached wood debris sticking up 90° at the sides of the hole that was not in the previous shot.
Super Grover Continuity mistake: During the scene in which the Black Pearl endures a strong storm and heavy rainfall, Captain Jack Sparrow's bandanna is soaking wet. In subsequent scenes, only moments from the storm, his bandanna is completely dry.
Continuity mistake: When Elizabeth sits on deck and points out the burning word Tortuga, the wound lines beside her change position between the shot facing her and the next shot, behind her.
Super Grover 
Answer: Yes, the idea is that this poor soul got too close to one of the Kraken's tentacles and one of the suckers pulled his face off. Presumably he can still breathe in some fashion, something has been left that allows air access to the lungs, allowing him to still be alive, although it doesn't sound like he's long for this world, so presumably the damage is extensive.
Tailkinker