also, if option 2 (instant pick-up) is on it should automatically switch to 1 when enemies become visible to prevent autolooting in battles (potions of healing can be instantly obtained this way for example).
or maybe during battles, quick loot shouldn't be available at all.
(3) The diamond stays the same (click on, click off) but there's an extra option in the Gameplay options menu where you can change the diamond's behaviour from 'loot on body' to 'loot off body'. (Or something worded like that.)
I think this would be the best option frankly. And thank you for posting this request.
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or maybe during battles, quick loot shouldn't be available at all.