I was wondering the same thing too about where the other child was at the time.Maybe with his parents? I haven't read anything about where she was.
The parents did know about the baby, see below
here is the link:
http://www.mlive.com/news/muskegon/index.ssf/2011/07/mother_of_missing_ludington_ba.html
Courtland said Phillips, 21, now charged with kidnapping in connection with the baby's disappearance, has always known he is the father of Katherine Shelbie-Elizabeth Phillips, but didn't have the heart to tell his parents.
Courtland said Tuesday that Phillips' parents have never met the infant, but are aware she exists.
I wanted him to take a DNA test that day because he didn't want to tell his parents that Kate is his. I was sick of it and said, 'Forget it, I'm not going to keep lying to your parents,' and we figured if he gets the paternity test, then we could show his parents the piece of paper, Courtland said.
But Phillips already jointly raising the couple's 3 1/2-year-old daughter, Haley, and preparing to be deployed to Afghanistan in August didn't want to tell his parents about the new baby, she said.
Such a weird case is right! I hope they find this baby girl..