Can't help you with which outer island but just stayed at Denerau Island for a week at 5* resort which was great and very convenient location 20 min drive from the airport, and can confirm that snorkeling and diving is non-existent there (all the other watersports are available however and great). So you have good advice. Travel within Fiji is not so easy (expect to take a day to get anywhere in each direction), so for a short stay this may be a problem. My impression is that Fiji is OK for diving and snorkeling but those aren't its strong points and other destinations are more likely to be chosen for that purpose. Certainly don't expect anything like Whitsundays/GBR quality.