Did a factory reset. Device is plugged in, the welcome screen in with Chromecast number is showing on the television. I open the Home app. I have one local device (a 2nd gen Chromecast in another part of the house) showing up in app. When I go to Settings::Add Device::New Devices, the app just spins on "Looking for devices." It doesn't find anything, just eventually kicks me back to "What are you setting up?" (Chromecast). Repeat cycle.
Thanks for reaching out to the Chromecast Community forum and I'm sorry to hear that you're having an issue with your Chromecast device. Let's sort this out.
Quick questions — what's the LED light status on your Chromecast (solid or flashing white)? What's the distance between the router and the Chromecast device?
Please manually connect to the Chromecast SSID. Here's how: go to the phone settings > Open Wi-Fi and connect to the Chromecast SSID (Example: Chromecast1234, Living Room TV, Bedroom TV, etc.) > Go to the Google Home app and try to set it up again.
That's cool! Glad to hear that the steps I've shared helped you to resolve the issue.
You can see this instruction on this support website article however, you may send feedback about this by tapping on the Give feedback about this article option located on the lower part of the page.