As far as the feat, Lifesense is concerned, a living creature is a source of light. Thus, they interact the same way that invisibility interacts with a light source:New question; How does Super Invisibility interact with Lifesense, the feat, which doesn't mention Blindsight? It's in Lords of Madness.
SRD said:Light, however, never becomes invisible, although a source of light can become so (thus, the effect is that of a light with no visible source).
As far as the feat, Lifesense is concerned, a living creature is a source of light. Thus, they interact the same way that invisibility interacts with a light source:
Yes, but does the light source being centered on a location, as well as some of the wording of the feat, reveal the most precise location of the target in quesiton?
Depends on circumstances. In an open field (or any area big enough to observe most of the circle of light), you should be able to figure out the five-foot square with only minor difficulty. In other circumstances, it'll be harder or easier depending on how things are laid out. Two items producing a shadow gives you a pretty clear line to the target, so you'll at least know what square.
Of course, at this level of detail, there isn't a RAW answer, and you need to check with your DM.