>But if 1 M Kg of (a bigger) block of ice are underwater, those 1 M Kg displace 1.09 M litres.
I will continue with my original assumption: 1 M kg., 1.09 M litres.
Of these, you can't have 1 M kg. under water. The entire ice block "weighs" 1 M kg., and part of that is above the water level.
The part under water would be 1.00 million liters, and 0.09 million liters would be above water. Taking proportions, you would have about 0.917 million kg. below the water, the remainder of the "weight" (0.083 million kg.) would be above water.
>So, if only that portion of the block below the surface were to melt (humour me - say it's held by pincers in water warmer than the atmosphere - like holding a sugar code at the top of your coffee) then the surrounding water should lose 0.09 m Litres in volumne.
I agree with that. Now, add the portion which was above the surface, and you won't have any change in volume.
Difference in opinions hath cost many millions of lives: for instance, whether flesh be bread, or bread be flesh; whether whistling be a vice or a virtue; whether it be better to kiss a post, or throw it into the fire... (from Gulliver's Travels)