Describe the bug
Make sure to include:

1. What did you expect to happen?
   Expected to get obsidian when it is mined.
2. What actually happened instead (i.e. what was the bug)
   It disappears.

Meta Info

• TFC Version: 0.X.X.105

What pickaxe were you using to break the obsidian? It is absolutely an item - it's the vanilla obsidian block. However it's entirely possible that the pickaxe you were using does not have the mining level of a diamond pickaxe (which is required to break obsidian and have it drop)

Edit: I can mine obsidian fine with a mining level 3 pick (red, blue, or black steel)

Ah OK understood, it was a steel pickaxe.
In that case I'd have expected the obsidian not to break, rather than break and disappear?

No, breaking without dropping is vanilla behavior.