"Since the thing is orbiting earth, why can't NASA just look up in the sky with a telescope to find it?"

Good question. But I do know that when you aim at something 22,000 miles away you have to be pretty close.

the band over the equator where geosynchronous satellites can orbit is about 82,000 miles in circumference, so that is alot of area. Plus we don't know it was geosynchronous. Satellites can go every which way. The can be 22,000 miles up and do the same speed as the surface of the Earth at the equator, but they can go any way. But then you have to track them to communicate with them.

There are also an infinite number of planes at which a satellite can orbit, the closer to the Earth the faster it must move, the farther the slower.

So it can indeed be like finding a needle in a haystack, and I mean without a magnet.

Normally the tracking system can follow the signal, but not if it stops transmitting. If it is not in geosynchronous orbit it can be extremely hard to find. Count this up to luck. If NASA couldn't find it even knowing where it was supposed to be odds are about like hitting the lotto. But then people do...