Recipes ARE case sensitive. So "Dread's eye" is NOT the same as "dread's eye". I think there used to be an issue like this before where an item could not be created because the ingredient in question either did not exist or used different case.
What needs checking is whether "dread's eye" is available in the game...if it is not, then the recipe should be modified to use "Dread's eye" and this is actually a bug.