How to make users default in searches? When a user tries to search for another user, the search returns no result, however, when it searches for a node e.g article, questions etc it returns a matching value immediately with search autocomplete. What is wrong?

Permissions are ok and user is set as default in settings. I want users to be able to search users, nodes, location or whatever available and matches their query.
In order to allow non-admin users to search for other users on your site, you'll need to give the appropriate user role (typically "authenticated users") permissions to "view user profiles" and "use advanced search". To access User search, you can utilize the "Advanced search" link in the Search block, or use the URL /search/user

Note, these permissions will also allow users to see other users' profile pages, so make sure this is acceptable for your use case.

If you need to search both nodes and users from the same text box, you'll need more than Drupal's Core search functionality to do so. See How to search both Users and Nodes simultaneously in drupal 7 for some suggestions.