They were digging in the wrong spot because the burn of the medallion on Toht's hand was incomplete and they used the wrong staff length. If they had gotten the medallion, they would have found it. They showed up at Ravenwood's at the same time as Indy, if Indy hadn't been there, they would have killed Marion and…

Oh crap, nevermind. The medallion they were going by were the burns on Toht's hand. Darn.

THIS! I'm watching the episode right now and if it weren't for Indy finding out the staff was the wrong length, they wouldn't have found it.