I just had a thought while thinking about this blog someone wrote on what good it might (not) do to get everyone together in FST with the island undwater... I remembered that when the island started moving, the graphic they showed of the island disappearing made it look like the island went underwater. Could just be choice of special effects, but I remember thinking maybe if that's how it moves it came up under the black rock (now disproved but still...).
The time lines don't all work out, and I doubt they have time to rectify something so complex, but is it possible the island did go underwater then? we don't know what time the losties jumped back to, or what universe, but it did look like it went underwater, and now we've seen it underwater.