It does, yes. I can manually flag the items for looting with no further problems, so the issue does seem to be within the “automatic” part of the flagging.
I can only confirm it does this in A16 (559), and didn’t report due to the fact at least it had the icon individually on each dropped item that didn’t get caught by the auto-loot.
Haven’t had a chance yet so far to boot into A17 just yet; which will be later today.