What land? That's a mountain range! And I doubt Orcs are much good at accurate mapping, so the fact that there was room for a city in the middle wouldn't have been at all obvious. Check out
this map of the Old World to see how tricky accurate maps can be (can you even
recognise Italy?), and then consider that on a flat world, you can't get any location information from the sun or stars: it's literally all 'how far have I walked and in what direction?'.
Bear in mind also that the
other Hidden Kingdom, Nargothrond, was almost certainly known by Morgoth to be underground (he must have taken captives who knew of it, after all), just like Menegroth. The obvious assumption would be that Turgon had done the same thing,
somewhere. The other elves didn't dig into mountains, though - and even if the thought that Turgon might be taking after himself and the dwarves had occurred to Morgoth, he'd probably have looked at the Ered Wethrin rather than clear across Sirion.
Or Brethil, which was steadfastly defended by the House of Haleth. Surely they must be hiding something more interesting than just a Mortal rabble in there?
The one he
actually should have spotted is the Havens of Sirion. Big M had the run of the entirety of Beleriand west of Amon Ereb, and yet the Sons of Feanor
still beat him to the Silmaril? Did he just give up and go home after taking out Gondolin?
hS