Wanted to test a loot filter change and so I dropped an item from my inventory onto the ground. I saw the animation of the item dropping and I see the item on the ground with the gold beam (rare item) but I do not have the option to pick it up anymore. Really unfortunate to just lose those items.
It isn’t an issue with loot filter - I am holding X in this screenshot and it isn’t visible. I also tried changing filters to no filter. I continued into further zones and found that all items other than I believe gold were not showing up. Relaunching the game fixed the issue.