This may be a momentary bug or a long term one, but I found that algae-covered stones was not just underwater, but under the world. I was able to target it but not see it, and after scrolling my view out I could see it several feet below the bottom of the pond. If you're having the same problem, here is the solution:
1. Shrink to your smallest size
2. Go to exactly the loc +1575, -45
3. Enter the command: /targ al
4. Enter the command: /loot
4b. You may have to grind a little on the bed of the pond to get the window up.
5. Position the loot window such that the item image is exactly where the 'Yes' appears on the No-Drop confirmation window
6. Spam click on the image/Yes button until eventually the item makes it to your cursor