The Loch Ness Monster was a robot used by the McGregor brothers to get more business.
Originally built by the McGregor's great grandfather, it was used to pose as the monster of legend to attract tourists to the Loch Ness, and did its job admirably well for four generations. When Admiral Jack Denver visited the loch during a fishing trip, the monster attacked his boat and sunk it.
Stingray was later sent to investigate. They destroyed the monster with a Sting missile, and discovered the McGregor brothers' deception. In the end, they decided to keep the truth about the monster a secret, and the brothers presumably repaired it to full operation.