Low income games bad!
Okay, that's outta the way. Diamond dust...it's wherever. Theoretically any mage with access to 5th level spells should be able to scry a location, teleport there, and fabricate all the diamond dust s/he'd ever need, or even just take a huge pile of carbon (ash, graphite, whatever) and Fabricate diamonds for free. Realism gets you lost in madness very, very quickly.
So, what's the game setup? Well it's expensive, so that casting those spells is a hassle. How much of a hassle should it be? That's up to the GM. A quest is a good simple option, though it needs to be a weak one since the gang is weakened. But here's how my old 2nd ed. batch of low-levels always ended up getting their resurrections paid for: first you get brought back, THEN you have to complete the Geas/quest that was put on you as part of the resurrection.
One really annoying quest later (or just really disgusting) the geas is up and the adventure goes on.
And what skill are you using?To fabricate artificial diamonds (they are even good for spell use? Questionable) you need the appropriate crafting skill:
You must make an appropriate Craft check to fabricate articles requiring a high degree of craftsmanship.
and the ability to succeed at a crafting check.
Modern processes give the equivalent of a huge crafting bonus. Probably the in game check to craft them would be aroudn100 or more.
It not a mater of player insanity if you have someone attempting this.
And you can't scry a location, you can only scry a person.