Hmm... that's really weird I must admit I haven't seen this issue before... AFAIK the physics engine (PhysX) may cause problems if any physical elements are way too far away from origin (this may result in racasting and certain collisions no longer working), but that's unlikely in this case... I could imagine an item or dead body falling through the ground for some reason (and keep falling indefinitely), but that wouldn't explain why you're never able to loot a body (not even in singleplayer).. and it would also cause other physics issues (collisions no longer working etc)...
I received the reports about the issue (thanks for that btw!), but unfortunately there was nothing suspicious in the logs... if the 3 dot icon doesn't even show up when looking at the body, it's definitely not a serverside issue.
It sounds like this issue always happens when trying to loot a dead body (and also happens for dead animals)? Are you able to pick up items from the ground?
What happens if you try to hit a dead player or animal with your pickaxe? Does the game recognize the hit, or do you just hit the ground beneath the body then?
Does your character collide with the dead body? What happens if you try to walk over the body, does it actually have some "mass" (i.e. does it feel like a heavy object, so you can't just walk through it)? Or can you push it away with ease?