Tips for a massive city manhunt.

Hello. Recently, my party has arrived in a city and a festival just happened. A friend to the party so happened to be running a game of Tag a Guard that he decided to totally change. A massive advertising campaign the first morning of the festival later and he has thousands of people, young and old, trying to win a pot of gold. Their only goal? Tag the party before noon (2 hours).

I have a baseline for how this will be ran, but most of it is more of a skeleton than a plan. Does anyone have any ideas for how to handle this? Tips for what to prepare for, tactics I can use, mechanics that would be fun, or anything like that? The party already knows no violence or property damage, they can't enter buildings, and certain spells like flight and invisibility have been banned (for good sportsmanship). I am aware that some of the party intends to hide on roofs, and most of the horde are children.

Additionally, (don't tell my players), this so called "friend" has prepared a familiar and a special casting of locate creature to constantly be tracking them and relaying the information (but only to anyone who goes back to the starting point).

I imagine it would be something along the lines of a skill challenge. They name a skill, you set a DC, and let them roll it, and narrate the results, and they can't use a skill twice. After a set number of successes or failures, they are caught or they win. Additionally, you could make a random table that you roll on after a set number of skills to make things interesting.

Dnd rules for individual combat/actions dont work well in large populations.  Say the party hides, and 40 people are within range to roll a perception check. Youre probably going to get two people who roll 20's and spot the party. 

There are some rules for handling mobs. But i dont know if they handle mob hide and seek.

You could maybe simplify it to the party rolls one stealth and the mob rolls one search.

But honestly, i dont see this realistically being a winnable situation unless the party hides in a pocket dimension or uses other magical means to stay hidden.

The fact that the guy who set this up is essentially cheating would make me doubly concerned if the party spent a lot of time trying to achieve the impossible, only to inevitably fail to a cheating npc, all together which might make some players feel a little railroady...

You're thinking too rules as written. This isn't a combat encounter, this is a story event. The environment. They are meant to win because a rogue with 11 acrobatics can very likely escape a horde of children. Subsequent dex checks to avoid, stealth to hide, and ingenuity. I get it isn't rules as written, but I'm looking for ideas, not how to run it.

Tip #1 : You don't need to keep track of all the participants. Instead I'd suggest running this like a series of random events as one or more participants encounter the party. 

Tip #2 : Have variety in the participants. Nobody said participants are just commoners running around looking. Consider:

• A group that have one or more hunting dogs to help them.
• A group trying to use potions / magic scrolls to cheat.
• A local Artificer who has brought a Decanter of Endless Water to flush them out.
• A street thief / urchin who knows secret passages through the city.
• A group of cowboys riding horses with lassos