JD-EE;
So both water and ice will work.
. . .
So one major postulate for answering the question above is whether there was some form of filtering between the radar return and the crew that made them unaware of the magnitude of the problem they faced.
Re water and ice, yes, ice crystals less so.
Filtering/attenuation/antenna tilt/gain...all are areas which modify the return signal being displayed. The 777 radar does a lot of this work but I am told but I don't know anything about it other than what can be read in the B777 AOM.