This same thing happened to me on a server that I get on a lot :\ I followed it until it until it went towards the ground. dug all the way in the ground and all around, and still nothing, and I even kept throwing it in the air but it kept saying it was right where I was. I'm thinking that it might be because the server was before 1.0.0, which might be a slight bug. Was the server or map you were on made before or after 1.0.0?
EDIT: oh, I see you found the problem already lol XD