Is this from the beginning of the short story? like you need to end it from here, yeah?
I do have a couple of ideas on how you could end it:
Since Kayla loses her memory, and she doesn't remember what her sister looks like, we could make Fiona look suspicious. In a few events Fiona would offer foods and drinks that Kayla does not like which makes her wonder if she really is her sister. Then one day as Kayla was trying to sleep, she notices that Fiona is trying to feed the same drink that she doesn't like, in her sleep. As she'd stubbornly refuse the drink despite it being a "medicine," her sister suddenly turns back into the sea monster Kayla encountered.
Scared, kayla runs out of the house and the outside of the house is no longer like it used to be but rather she was back to the ship again. The sea monster comes out from the sea to attack her and the cycle was going to repeat itself.
Since she did not drink whatever fiona was feeding her, her memory was intact and she knew something was suspicious. Then when the monster was going to attack her, she sees that at the head of the monster was a figure etched to it. Upon closer inspection, that figure was none other than herself.
She gets confused on what's going on but she decides to attack it anyway. This time the fight wasn't going to be like before because she knew where it would attack her. After she successfully reaches the head of the monster, the fake kayla looks at her and says, "My sister...Fiona you're here."
The confused Kayla suddenly gets a sharp pain on the head and loses focus, which makes her fall into the ocean. Then a hand pulls her out and she loses consciousness again.
When she opens her eyes, thor is sitting beside her and says, "You're finally up, fiona."
"where is my sister?"
"Kayla died...when she was twelve, what do you mean?"
"....what?"
"you encountered a strange sea monster, if it wasn't for me following you then you would have died."
"but kayla was there! No...I was Kayla and then fiona...no then I saw Kayla.."
"I'm sorry but Kayla died in a sea accident many years back when you both were heading to ruby island. Only one of you made it alive. You know this too, right?"
"...how did you find me?"
"After we fought the giant, you were heading back to ruby island to visit kayla's grave. I also wanted to accompany you and decided to follow after you left. That's when I saw you were attacked by sea monster and I saved you then."
Long story short: The Valkyrie who lost her memories was Fiona. She was the one who fought the giant alongside Thor and was heading to ruby island to visit kayla's grave. The kayla who died in a sea accident many years ago, her body was never found and hence her spirit was attached to the sea monster that caused the accident.
when fiona got attacked, the sea monster kayla wanted fiona to never leave her again and caused fiona to lose her memories and play games with her head. She fed a poison to fiona every night so that she never wakes up from the illusion, making her to fall in the depths of the Ocean with her.
The dead kayla only wanted to be with her sister.
