I was told at the two-week Army Law of War Seminar (at their JAG School at UVA) that this is an old wive's tale, and even as a JAG with a significant amount of LOAC education and field experience I can't see any reason the use of a .50 cal with ball ammo would be illegal. See, for example, this Navy JAG page, which plainly states that "use of .50 caliber weapons against individual enemy combatants does not constitute a violation of [the] proscription against unnecessary suffering or superfluous injury."
Then someone needs to tell Intel officers that the Air Force JAG no longer considers .50 cal against personnel a LOAC violation because that's exactly how it is taught.

In fact, Air Force Security Forces are also taught the very same thing as I happen to know a former one. Of course, as it's mentioned, no one ever really cares about that "law" anyway.
However, that Navy page does not appear to be the best work from what I read. Under lasers, it does not distinguish between lawful and unlawful uses of lasers. The use of blinding lasers is strictly prohibited by LOAC and that's not mentioned at all. It's definitely a broad overview of LOAC and an incomplete one at that.
Nevertheless, the primary use for a .50 cal sniper rifle is anti-material, not anti-personnel. There are few instances where the .50 cal rifle would be used against a person because the distances at which you use that gun as opposed to a 7.62mm or .30-06 require an exceptional amount of skill and perfect conditions to be accurate. It's also not the smallest gun to be toting around with a two person team trying to stay as invisible as possible!