I'm not sure of all the intricacies of how it works, but indeed, each club has access to a list of all the players who are listed for loan, listed for transfer or are out of contract. It is then your choice whether to have the player you would like scouted or buy him 'blind' - in other words, without you or a scout seeing him play. Concerning other countries, I am fairly sure that throughout Europe the system is similar, though obviously some rules vary.
The search function will only bring you famous players and listed players in your region. Using the find function to find players you know about is what is banned.
Doesn't Joe Fake-Player now play for Bournemouth?
Jerry on the admissions desk, forget his surname