Sorry, Rich, that’s a known issue and the devs are aware. What is actually happening is the water is between you and the thrall/loot and you end up drinking instead of looting. Since the Underwater City is, well, underwater, it’s a problem everywhere.
If you can target the thrall, you may be able to loot from the preview screen. Alternatively, destroying the corpse may produce a loot bag that is above water.
Further to what @Jim1 suggested, I usually craft a sandstone foundation, harvest the body and when the bag is generated, you can push it around with the foundation. Don’t place the foundation, just “equip” it and push the bag with it like in a mini golf game
EDIT: But I agree, this bug is annoying and needs to be fixed with priority
There’s another way to loot the body that doesn’t require any tools. Stand right next to the body, then rotate the camera so you’re looking straight up at the sky. In effect, the camera moves itself underneath the body, so you’ll be able to loot it. Good luck!
This has been around for a while, I usually just press F (loot all) on top of the body and it works for me. In the weird occasion that it doesn’t I just break the body up with a tool to make a bag.