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Both of my pirates completed this task by killing the Huge Gator that spawns near the second Fly Trap in the Misty Mire on Tortuga, so location shouldn't matter. (Unless they've changed it recently, which I kinda doubt since there aren't a lot of Huge Gators around anymore to begin with.)
I may be stating the obvious, but make sure you are killing Huge Gators, and not just Big ones. If you are, then it should say "Checking for water" regardless of whether it will be found or not.
If it still is not working, I would follow the usual procedure for dealing with suspected glitches: (1) Change servers. (2) Log out. (3) File Bug Report.
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