Beaufort Island
Prospector: See page 154 of the Mahon Report, which contains two photographs of Beaufort Island taken by the passengers. It was, as you say, very conspicuous.
Mahon gives at least three explanations, two of which contradict eachother. Vette comes up with an elaborate theory to explain why Peter Mulgrew said "There's land ahead" right when Beaufort Island was dead ahead, suggesting that he was referring to other land.
The most likely explanation is that on the three occasions they flew past Beaufort Island, they assumed that they were in the middle of McMurdo Sound and simply disregarded the island (even though there is no such island in the middle of McMurdo Sound).