Whenever I get a rare chest vignette alert pop-up on the screen, left clicking it does nothing. I was expecting it to target the item and give me a waypoint arrow via TomTom (which is enabled in settings). What am I missing?

There's no way to target a chest, so there's nothing for it to do. You can make a waypoint, but it uses the same shortcut as on the mob popups -- so you'd need to ctrl-click the popup for it.