I played Possessed in my last season of Mordheim (or maybe it's still current, haven't been checking in since the new year). I'm not an experienced player by any means, but here are my thoughts.
1) I didn't really get to play my super-possessed, so my possessed started with spines. I found it was ok, it's good for stripping off Parry and can take models out of action.
For my Mutants, I had one with a Scorpion Tail, and another with an Extra Arm (Who still has... well... no arms modelled). I can't really comment either way, since my games were generally me wiping the floor with the enemy, or being wiped off myself. Scorpion Tail just seemed to miss a lot for me. I don't remember it ever doing that well, but that comes down to dice I suppose. Extra Arms is a bit of utility. I went with it because we played shields giving an extra armour save in close combat. So I could have survivability, and still use 2 weapons.
2) I think you need to take a Possessed early. Because to get a monster possessed, you need the cash rolling in. Don't rely on talent, because I didn't get a Lads got Talent until very late in the campaign, so was stuck with just my 4 heroe's. Not taking a Possesed would leave me with only 3! Also, Possessed can get very good if you roll decently for your upgrades. My Possessed ended up being strength 5, toughness 5, resilient, combat master, dodge, step aside, jump up with 3 attacks and spines. Nasty to come up against (of course, bloody crossbow managed to crit him out of the very last game. Super frustrated with that. Was hoping for another point of toughness to get around that).
3) Beastmen are great. Take them if you can. You need your heroe's, so at minimum the Magister, Mutants and a Possessed. Some people squeeze another Possessed in, but then you've got a very small warband. I started with Magister, 2 Mutants, Possessed, 2 Beastmen and 2 Brethren. Beastmen are the stars, weapon skill 4, toughness 4, 2 wounds. Very tough to take down.
4) Can't remember which one sorry. I converted mine out of Flagellants to look like the official models. My Mutants were more hunched over, and used heads from the Men-At-Arms kits (Cause they're ugly, so are disfigured). I think it worked really well... just need the motivation to finish the job and slap some paint on them. Beastmen were just from the Beast Herd kit.
If you're going to play Possessed on proper base size (25mm), don't use the Spawn kit. The Spawn are huge (probably bigger than an Ogre). Not an appropriate size for a model that isn't a Large Target. It'd look cool, but they're just too large.
Definately think Possessed are a great warband to choose for Modelling purposes. The mutations alone let you do a lot of cool looking stuff.