How do archaeologists locate sites?

Research.

An archaeologist may spend years reading old manuscripts and collecting local stories in an attempt to pin point the location of cities and places that no longer exist.

After that there is a measure of luck involved, usually a test dig is performed to determine the accuracy of a site before a larger amount of money is committed to perform a full dig.

Some sites have taken decades to find and are the culmination of many years of work by entire teams of researchers.