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I was running around in circles on the island, until i found a shadow of a dig spot somewhere on the island. However, at that point, giant crabs caught up to me and I lost it. I found the dig spot again, and the first time I didn't get the chest but the second time I did. Weird. Anyways, the chest I found is right where the ground changes steepness. It's around a dingy that has a large amount of rocks to its right, and nestled in the rocks is a giant crab. Assuming you come from this dinghy, go up the left side of the rocks the crab is in, and walk around where the ground's steepness changes. You should find a dig spot there. It might take two tries, because this quest isn't about finding the right dig spot, but more of luck.
EDIT: By the way, you don't have to log out to reset dig spots. You can just go to your ship, then anchor again. That resets it.
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