The Inventory Location is actually the existing locations in the system at the time the item is created. The reason why there is no item showing when we set the Inventory Location = Location ABCD (sample new location) because there are no new items created after the creation of Location ABCD.
If we will create a new item (with Location ABCD already created in NetSuite), then go back to our search and set Inventory Location = Location ABCD, the newly created item will show in the item search.