Your skepticism is unwarranted - it's real. There's a documentary about it. Small droplets of rotting fat float up to the surface, where the dog can smell it. They had to account for ocean currents and the rate at which the bubbles rise in order to sufficiently narrow the search area. They couldn't find it at first, because they misunderstood the mechanism and assumed it was gas bubbles, which obviously rise at a different rate.

Besides - where else would they have gotten the information from? She was killed on a submarine with no one else aboard but her murderer, and he wasn't talking.