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The party has just been given some magic items with unique designs on them by someone they don't like. They don't want the person to know where they are, but they realised the locate object spell would be able to locate the equipment they've just been given. Their solution was to coat the items in lead so that the spell won't work.
Would the belts, headbands, etc. continue to function once they have been treated in this way?
First of all, Locate Object only works within about 1/4 of a mile, even for a high-level caster, so that might allay a lot of their concerns. There are more powerful spells with fewer restrictions, but the PCs will probably have access to their own spells like Nondetection as they start facing more powerful opponents.
As far as how the lead affects the functioning of the item, I think you have a fair bit of leeway here as DM; if you do want someone to be able to locate the items in this way, I think you can safely rule that the lead interferes with other effects of at least some items - the deflection field from a ring of protection might be blocked by the lead, or a belt coated in sufficient lead might simply be too stiff and awkward to use, magical or not.
If you don't intend to have anyone try and locate these items using their designs but you feel weird about magic items coated in lead, an alternative would be to let the PCs have the items reforged for a small price, changing the designs enough to foil Locate Object.
Coating the items in lead would prevent the spell from locating them. This is stated right in the spell in the link you provided.
The issue is that there are no rules about coating items in lead and how this would/could affect their functionality. Then there is that lead is a very weak metal. It should not be capable of withstanding frequent use. So unless something was specifically designed to protect what it was holding then you should be frequently repairing it.
Then you get into weird cases:
Other items are not so straight forward. Would a coating of lead prevent rings or other worn items from functioning properly? I cant find any rules about situations like that.
So the end result is that the DM would have to rule specifically for this.
Worn magic items don't necessarily require skin contact. For example, an amulet worn outside clothing still functions. So, some barrier between the item and the wearer is allowed while still allowing the magic to reach the wearer.
Detect Magic is blocked by "1 foot of stone, 1 inch of common metal, a thin sheet of lead, or 3 feet of wood or dirt".
I think it fair to rule that such a barrier between an item and someone attempting to wear it will block the magic. This is, however, a ruling as the books don't say either way.
If the item requires some sort of manipulation then it won't work while in a lead box. For example, a gem of seeing won't work, because you can't see it. For example, an anatomy doll won't work, because you can;t get at the item to dab a few drops of blood on it.
An item with a command word might still work, depending on how soundproof your lead coating is.
Something that needs to be thrown or placed should still work.
Bags of holding will still work fine, except that you can't actually retrieve or place any items. :-)
A lead-lined sword or axe is useless but a lead-lined mace might be more effective than normal.
As lead has no other properties in D&D than interfering with some detection magic (and making up sling bullets), this is hard to answer.
If 'a thin coating' of lead is equivalent to 'a thin sheet of lead,' then this would indeed block the locate object spell. I see no need for it to interfere with the function of any item that itself is not using detection magic. However, as this is not spelled out, or even really inferred, in the rules, the interpretation of this is up the DM.
