Steps to reproduce the issue

Install the system plugin Sourcerer from JED:
https://extensions.joomla.org/extension/sourcerer/
https://www.regularlabs.com/extensions/sourcerer/features#sourcerer_downloads_free

Enable the plugin.
Go to Languages - Create a New Override.
Search text you want to change: copy and paste for example the following text:
SRC_TOGGLE_SOURCE_TAGS

Expected result

The language constant is found

Actual result

No matching texts found

System information (as much as possible)

Environment 1: Wampserver, PHP 7.0.10, Joomla 3.8.5 and also Joomla 3.9 latest nightly build.
Environment 2: Linux, PHP 7.0.27, Joomla 3.8.5

Additional comments

This behaviour is not limited to the extension Sourcerer. Confirmed this with a small 'Hello World' system plugin but was unable to attach it to this ticket.

Tried Search with location set to both Site and Administrator with the same result. If you use the language constant and add a new text as override, it works all right in both Site and Administrator when the overrides are created separately, or when 'Both' is selected.

According to @mbabker, "Since 1.6 core has supported a language folder in the extension directory and the override system should support finding those files." Ref. https://forum.joomla.org/viewtopic.php?f=706&t=959242#p3513752