There's no "need" to do anything different. It's up to you. The Novels category may well stay, who knows.
Quote by wxt55uk
With each chapter, I find myself changing the original storyline to mould it to fit a genre... this novel feels like it is being chopped up into a series of short stories within the longer one
That's surely down to writing confidence and structure? A movie is made up of scenes and each scene is about something and they join together to form a cohesive whole. Chase scene. Love scene. Dramatic tension scene. Backstory scene. Character hits rock bottom scene. Overcomes it and learns something scene.
In an erotic novel, if you can't break a story down into defined scenes that fit together then it implies the overall structure might need work. I doubt anybody embarks on a movie with no idea of what highs and lows, scene beats and character interactions are taking place along the way. So if an author doesn't have a plan for the novel and just writes each chapter as it comes, it will feel choppy.
I don't know what obstacles you need to overcome to adapt your existing work to Lush (content terms of service violations or simply editing, for example) but if the original isn't able to be broken up into scenes as it is written, then maybe restructuring it as a whole would be prudent before attempting to serialise it?
If all you want to do is break it up every 8k words or so and publish each part in Novels, go for it. Now we have the ability to refine by tags, and improved searching is on the way, maybe it makes moot the fact that there isn't much of a signal in the Novels category as to what the story is about?
The only reason removing it was even being considered, as I've mentioned a few times in this thread, is because putting things in defined categories with appropriate tags and threading them together with the Series link feature is a stronger signal to readers and search engines that helps put your work in front of more people who want to read it. If you're happy not taking that opportunity, it's entirely your call.