It needs further investigation but it seems to be an API problem.

Hammer correctly finds the location by name and sends the id in url:

[ INFO 2018-06-14T10:22:47 API] Server: https://centos7-devel.example.com/
[ INFO 2018-06-14T10:22:47 API] PUT /api/locations/6
[DEBUG 2018-06-14T10:22:47 API] Params: {
    "organization_id" => 3,
           "location" => {
        "organization_ids" => [
            [0] "3" 
        ]
    }
}
[DEBUG 2018-06-14T10:22:47 API] Headers: {}
[DEBUG 2018-06-14T10:22:47 API] Using authenticator: HammerCLIForeman::Api::SessionAuthenticatorWrapper
[ERROR 2018-06-14T10:22:47 API] 404 Not Found
[DEBUG 2018-06-14T10:22:47 API] {
    "error" => {
        "message" => "Resource location not found by id '6'" 
    }
}
[DEBUG 2018-06-14T10:22:47 Exception] Using exception handler HammerCLIForeman::ExceptionHandler#handle_not_found
[ERROR 2018-06-14T10:22:47 Exception] Resource location not found by id '6'
Could not associate the organization:
  Resource location not found by id '6'

But on server side the resource is not found, because the resource_scope is []. It might be related to recent changes in taxonomy scoping.

hammer location info --id 6 works normally.