The algebraic loop is created when you measure something in SimMechanics and directly feed it back as an input to the same physical network.
For a simple linear viscous force, I would consider 2 things that would avoid any algebraic loops in your model.
1. If the external drag is fully viscous, is it possible to simply specify a damping coefficient in the "Internal Mechanics" section of the Joint block itself?
2. If you are sending a speed in one location and applying the drag force elsewhere, you're probably using a PS-Simulink Converter, Gain, and Simulink-PS Converter block. Instead of this, you could use a PS Gain block in the Physical Signals Simscape library.
This approach will not give rise to an algebraic loop because you are not converting any values to Simulink signals. In other words, you're keeping this drag relationship as part of the physical network of equations.
The Algebraic Loops section of this documentation page explains this better. Don't worry about the fact that this uses SimMechanics First Generation -- the same principles hold for all Simscape/SimMechanics/etc. products.
