It boils down to ADI not having a damned clue about what the Alien was all about.
They removed the penis head to make it pointier and more 'menacing'.
"Sexual connotations? Shit no, jagged angles are scary, man!
The tubes? Ha, screw them, it looks like it's made out of a car engine. Fleshy is so obviously a better choice to make it look more realistic.
Yes, there we go. It looks like an ambulatory shit, but you know what? It's better now. That's what we're doing to it. Making it better, because it was broke before, see? It needed fixing. So we fixed it.
What? Giger doesn't like our designs? Neither do the fans?
Pfft.
What do they know?"
And then they promptly continue to rape it.