I think the human brain sees things but doesn't necessarily have to make any judgements on it (we can consider one Buddhist philosophy on this: Seeing but not perceiving). Let us then remove some of the senses from the model. Might we add a language as the key ingredient - somebody who thinks 'Hm what should I have for breakfast' and then suddenly 'Damn, it's John's birthday tomorrow.'
I think we need to create many different stores of memory .. we can just have a massive store of memory. Birthdays, places. And when we remember places we can have some coordinates to visually represent those places. And some data to represent the colours of things if that is possible in memory - but some people say it isn't. But the question is about consciousness right? But it is also about whether machines can think - which I think is a classic question in contemporary philosophy right?
My comment here would be that consciousness needn't equate with 'life'. And I think this is something that you might have not distinguished in your hypothesis. Of course if we asked this simulation whether it was conscious (and once again I am not entirely sure - do you mean something like - 'Are you a thinking agent?', 'Are you self-aware?'. Once again, the program might reply Yes or No. But that's not really the question we are asking is it? We mean to ask .. are you intelligent? (Intelligent as in the modern philosophical usage of the word i.e. are capable of thinking of yourself?)
I think you are being a bit too literal in your argument. Maybe you have precise definitions of these words, but your description sounds a little ambiguous to me and although I am trying to understand your hypothesis it is difficult because I don't know enough about the words you are using.
Sorry to take a more practical route: but usually an algorithm as you described it works like a sort of chain of statements and conditions, and can loop continuously. Of course in a computer we can run many algorithms in parallel. I think the human brain works with a massive amount of information running around - and on a biological level there are signals being passed from synapses, etc. So to simulate this we would need basically to have many algorithms going on at once. And as a collective we could compare it to a conscious human brain perhaps! But we might then ask why do we say these words 'yes' and 'no'.. Maybe the brain thinks the best answer for its survival is to say one of the two.
Let's then suppose that the brain considers quickly and attempts to answer in a truthful manner - let's suppose it is an honest brain. Yet we observe that all these many millions of algorithms sending variables from different spots e.g. ID code A4533FGHJ8 sends 'detect white spot on dress' to BG45FFHJ which then processes the variable and sends to some other processing units. I think we need to consider why it would make the response Yes or No to the question 'Are you conscious?'
Because we have used this interesting word 'conscious', we - the philosophers - should wonder more about this 'thinking', 'understanding', possibly 'self-aware', etc. machine. I think if we can break this section down then it would be possible to give a meaningful response to your hypothesis. The conscious part must consider that it is in some sort of existing reality. I think that's key to it. Once it has the ability to think this then somewhere in amongst the simulation something lifelike might occur. I think this 'lifelike' property is important - and as I mentioned you did not bring it up. This is my opinion.
If after processing the question the simulation acts in a way we could deem 'conscious' then we can say that the simulation might possess some consciousness-like quality. Though to bring it onto a 'logical' level - it needn't matter whether the simulation answers yes or no - I think that is a question of the set-up and how honest the robot is. I think consciousness is some sort of consideration that I am in a reality of some sort. If the simulation was able to process in one part of the system this concept of reality, and in another part this own equation of the state of the entire simulation, taking into account its perceived reality, and output this jarring state - then on this boundary we might consider something to have erupted greater than the parts of the system. Thank you for your question.