Why do NPC guards scan?

Pretty sure it's just something they're set to do even though it makes almost no difference. Unless these NPCs are given 90 scan, it's pointless as hide maxes out so easily. Think of it as a shitty emote they do more than any real counter to stealth. By and large, NPCs are completely helpless against succesful hiding. Even if their scan did work, the way that skill functions, you could just hit 'east' again and get past. Getting stopped by a guard doesn't take you out of stealth.

is it even possible to guard while hidden?

It is.

One of the muggers on Hathor's guards the east exit and is hidden.

Doesn't even break hide when he blocks you-- which, come to find out, wishing up an inquiry on how submitting a bug report that hide isn't broken after a successful guard action nets you a "you don't know what that guy is capable of" staff message, as if he's some spoopy magicker or something that never uses spells or anything in combat.

Nah man, -clearly- he's a dwarven mindbender that squanders his talents on being really bad at petty mugging.

There are plenty of NPC guards that scan, and their scan is functional at all of the mid journeyman- mid advanced easily. If you're wearing hide/sneak gear you can boost your hide from advanced all the way up the distance to master basically so that's why there's this huge illusion. Take your hide (advanced) person up to them naked and they will see you sometimes. Your weight also heavily affects your ability to hide/sneak. At the very least, weighing to manageable will get you seen by them and you can twink up. You ask why they do it? It's so that you can twink(or be caught if you're a low level sneaky doing things you shouldn't while you're wanted). Which is one of the largest complaints of sneaky classes(IE: I can't twink sneak/hide to complete master without a friend ranger and OOC communication; which is a lie).