An article detailing the finding of The Foolkiller Submarine, the mysterious sub found in the Chicago River in 1915, has been dug up in the archives of the Chicago Examiner. Offhand, I think this is the first mention of it I've seen in a Chicago paper outside of the Trib.
The article states that Deneau was in the river near the Wells Street bridge when he found the zeppelin-shaped craft, half-buried in the river, by stubbing his toe on it. He determined that it was a submarine, and that it had a non-working engine. Upon surfacing, Deneau seemed decidedly amused.
"Why didn't somebody tell me I was working in a war zone?" he joked. "A man ought to get extra pay when he has to run the risk of submarines every time he dives, oughtn't he? It's dangerous. And are there any mines in the river?"
As to an explanation for the origin, we have what may be the best clue yet as to what the thing was, if it wasn't a vessel built by either Lodner Phillips or Peter Nissen: "I have heard," said E.S. Monville, the federal inspector of rivers and harbors, "that a submarine made by a naval architect was sunk in the river about fifteen years ago."
THe Examiner also contacted a man from the Department of Justice who said he was confident that the submarine had NOT sunk the Eastland.
One must remember that at this time, World War 1 was just getting under way, the deadly new submarine boats were in the news regularly. This DOES sort of fly in the face of the notion that Deneau had faked the entire thing, as Gaper's Block put forth a while ago. There's still nothing concrete saying how long the thing had been down there or who built it, but I don't think Deneau built it himself.
The Examiner also described finding the bones in more detail - they were mixed in with the mud and muck that had filled the craft, and were found while it was being cleaned out. The Examiner made no guess as to the identity of the man, but suggested that the dog may have been a collie. By this time, they were stating that it had been built around 20 years before.
Another Examiner find adds another new tidbit: in addition to touring with Parker's Greatest Shows and its famous engagement on south State street, the submarine was also, at least briefly, on display at the Riverview amusement park! The date here was June, which is a month AFTER it was on display in Iowa. Apparently, it ended up BACK in Chicago after a short run with Parker's Greatest Shows - so we now have a new "last known location" on it!