The electro/mechanical reason for the plane's troubles may be plausible but I doubt the area in the red circle is where it went down.

IMO, it's reasonable at this point to assume the aircraft did not continue along its programmed autopilot course very far past the last contact point. That red circle covers a fairly well militarized area (Vietnam, China, South/North Korea, Southern Japan) and the civilian and military radar-warning systems of one or more of these countries would have detected an aircraft that was not on its known course.