I could find the corpse, but couldn't loot it in time before the cutscene starts. After the cutscene it vanishes. I just realized I can sell this amulet and get rid of the curse. I guess i'll just do that.

Probably a bug. If you haven't saved before the Arachas fight, then you are probably out of luck. In 2 playthroughs though, I was able to loot it (first time I clicked fast enough and got it before the cutscene, second time I just used the amulet afterwards and it was fairly easy to locate the corpse).

I would love to see a mod or patch that allowed bodies to stay for a while before turning into little puddles of entrails. I have had to reload several times after the Arachas fight because I could not find the loot under the vegetation, even with the medallion active. I need to kill the thing near a landmark of some sort to be able to find its body.

I think it has to do with your computer specs if you can loot in time or not for the cutscene. Everything about this quest is very buggy and poorly thought out though. Left a really bad taste in my mouth.

The devs actually instituted auto-looting for a later boss fight (in Act 2), so there's no reason why they can't do the same with the Arachas in Act 1. Seems like a no-brainer to me, and I hope it's on their list.

On my first playthrough I played that fight like four or five times before I could loot the corpse before the cutscene started... on my current playthrough I decided to make a mental note of where the arachas was when I slew him and told to Iorveth to wait for me. I went back and checked the spot and sure enough the corpse was there - and it didn't light up when I hit my amulet.

I don't know if this will work for you, but it may be worth a shot. Also, I think Zoltan can get the deathblow and this may affect the loot drop. It's very frustrating for completionists, hopefully they'll address this in a patch.

There is a mod for this I think.
Check out the stickied mod thread, it might be in there.
Someone definitely found the values you can change in a file that looked like it referred to mob body duration.
Yes this is what I did. I told Iorveth that I'd catch up with him and then I just used my medallion to find the loot.
However, it didn't light it straight away. I wandered around the clearing a little bit, back and forth, and then it appeared. Try it out.