I seem to be an utter failure at using Worldscape editing. I have a stagnated mod, because I simply need to create a new Worldspace, but cannot understand the tools. I thought I was on to something here. I am making an Oblivion-esque World, so I created a copy of Malacath's Realm. I used the lasso tool to select all but one island, and then used the lower land to drop everything else below the surface of the water...or lava rather. I then added a few things, a sigil tower in the back, a door, and a chapel. In the CS, it all looked perfect, but when I looked at it in game there were weird jutting segments.

http://img253.imageshack.us/i/oblivion39.png
http://img207.imageshack.us/i/oblivion38.png
http://img13.imageshack.us/i/oblivion37.png
http://img195.imageshack.us/i/oblivion36.png
http://img10.imageshack.us/i/oblivion35.png

Can anyone help tell me what is wrong?

That's what happens when the gradient between one cell and another cell is too steep. That happens a lot when you use the lasso tool and other tools that 'force' a pixel in the heightmap editor to be a color instead of gradually blending between colors. You can fix that in the Cell View window using the Landscape tool (H). Just set your brush to smooth and it should smooth them out. Sometimes it won't let you smooth certain vertices if the gradient is too steep so you have to move over until you find an edge of the cell it will allow you to smooth and work your way back. I've fixed dozens of these things, they're nothing to worry about.