Instructions
Press "Start" and select "Bag."
Select the "Key Items" tab.
Select "Itemfinder" and press "A." The Itemfinder will immediately tell you if an item is in the vicinity, and will rotate your character to point in its direction.
Continue to use the Itemfinder in order to isolate the exact location of the item.
Press "A" next to the empty patch of land where you think the item is. If you are correct, you will find the item.