Progression from a simpler creature to a more complex creature is not evidence of intelligent design though, it can be said that there's a competitive advantage gained in the higher complexity of the organism, and therefore that's why more complex organisms are the evolutionary predecessors of less complex creatures.
Or that it's easier to produce a successful creature by adding something than by taking something away in most cases, because a large proportion of what the creature has is necessary for its fitness in some way. (I wonder if that idea actually works, it just seems right at the moment

)
By the same token by looking at a fossil skeketon at what point is it classified as a fish and not some other creature?
Oh, I think some people could spill blood over questions like that. It's an unfortunate effect of evolution: organisms don't just jump into new, discrete taxonomic groups, instead, they change gradually. Hence transitional forms, hence blurry boundaries. There's no well-defined "point", there's black at one end, white at the other, and all shades of grey in between.
So it's open to interpretation? There is no definitive answer this is a fish and this is not?
"Fish" is an arbitrary category imposed on nature by humans. Humans like pigeonholing. It's how we make sense of the world.
If everyone could agree on what traits make something a fish or a tetrapod, then maybe there would be a definitive answer. But that would still be declaring that
this shade of grey shall be considered black.
Yes it predicts design for a specific habitat.
What does that mean? Do the following creatures fulfil that prediction?
A tuna, who must spend massive amounts of energy on drinking seawater and getting rid of the excess salt because its blood isn't half as concentrated as seawater and it leaks continuously by osmosis?
(For things like salmon, you could say that they must achieve a compromise between freshwater breeding grounds and their adult habitats, but to my knowledge, tuna don't go into streams)
A dolphin, who, besides having the same problem with water, must surface regularly because it can't breathe underwater?
A fruit fly, who lives its entire larval and pupal life in rotting fruits but can be stressed or
killed by temperatures commonly found in them? [
paper]
So by that logic I would say if we have that much trouble defining creatures we have full access to how much more difficult trying to form relationships from bones alone?
Oh, I think I know what you're getting at. Unfortunately, (1) bones can be quite diagnostic, at least at the higher levels of classification like fish vs. tetrapod, (2) it's not so much a question of forming relationships, it's more which branches of a given family tree should be included in Tetrapoda or Aves or whatever. Can you see the difference?
(
N.B. I'm
not saying determining relationships is easy. I think there are still debates over which fishapod is closest to actual tetrapods and things like that. However, that part of taxonomy is
far less arbitrary than putting names on the resulting trees. For one thing, the tree-building is often done with very fancy statistical methods that are known to be fairly good at finding evolutionary trees, while the putting the names bit is, well, pure, subjective human judgement.)
Also if we based modern species on skeletons alone it would seriously reduce the number of species none to us.
Yes, and your point? Morphological species are also just boxes that help us make sense of the fossil record. It's
irrelevant how many species of some fossil creature we recognise. The data and the patterns in it remain the same whether we call a particular skeleton
Homo erectus or
H. ergaster.
Do you think if we took all modern dogs known to us and buried the skeletons in different strata and then dug them up we would say they were the same species and able to interbreed?
No, but that's irrelevant.