You say "pinpoint the location" in quotes as if Detect Magic says "pinpoint the location." It doesn't,
I'm a bit confused. Why would the phrase "pinpoint the location" end the debate? Pinpointing the location doesn't negate concealment - at least not by default - so why would that help? We know the spell gives you the locations of each aura because the description says so: arguing that it doesn't say "exact location" is semantic hairsplitting to no good purpose. We also know that Arcane Sight allows you to "see" the auras, because the description says so: Detect Magic isn't explicit about the mechanism but I don't see that matters much.if it said "pinpoint the location" there wouldn't be an ongoing debate. It mentions you can obtain the location, but not specifically how you do it.
The mage with arcane Sight (ie without glasses) walks into a room, quickly spotting the leafy green sheet he's come to recognize as being a second level Illusion effect loosly covering something. The subject's general placement and vague humanoid shape implies its either an individual or statue, but he wont be able to determine which until he drops the magical sight to see the subject's fine details (ie puts on his glasses) because until he does so, it could just as likely be a statue enchanted to pass along a message via a Magic Mouth as someone hiding invisibly against the wall, or using any of the other second-level effects: blur, hypnotic pattern, minor image, etc.
If someone's hiding using cover that would stop Detect Magic - and such cover can include "hiding behind another creature or object that has a magical aura", then line of sight is blocked (although I would give a circumstance bonus to Spot checks made to detect the hiding creature). If someone's hiding in shadows or "in plain sight" and is radiating magic, the Spot check to notice them with Arcane Sight automatically succeeds.

(Dungeons & Dragons)
Rulebook featuring "high magic" options, including a host of new spells.