Unless it says so on the coupon, i dont see why points for newspapers/magazines wouldnt go through at SDM. Ive never purchased that specifically myself so i cant say.
In the PCO FAQs it says:
Q: Where can I use my personalized offers?
A: Most personalized offers can be used at participating stores of the PC Optimum program (depending on the product’s availability). Some personalized offers will be exclusive to certain locations and called out at the top of the offer.
So, looking at my offers this week, i can buy Cadbury, Quaker, Neilson, Dove, cereal, candy, razors, skin care, etc at loblaws or SDM this week and get my points.. as long as the store carries the item, it shouldnt matter.
Other items like celery, apples, veggies etc obviously i need to shop at a grocery store to find them.
I dont know if newspapers/mags are a exception on that personalized offer, falls under "most", or maybe its just a glitch in the system that it didnt go through for you.

