I have the bluetooth mac-id of the target device. The bluetooth however is in hidden/not visible mode.
Both phones are android. (Non-root).
I did my research and I * know * that I can CONNECT to a device (in most cases) if I know the mac-id, however I want to just scan for proximity and NOT connect i.e. if the target device is in bluetooth range and I know its mac-id, can I * just * know if its in proximity (or in loose terms, scan for it?)
The short answer is no, you cannot discover undiscoverable Bluetooth devices.
Having a device in
undiscoverable mode is a security measure implemented by manufacturers to prevent abuses such as device tracking. This make a standard bluetooth adapter (such as yours) completely unable to state whether an invisible/undiscoverable device is close or not.
However, it turns out this kind of security is not optimum and has been broken recently. You can find here Michael Ossmann's work on
Ubertooth, a small Bluetooth adapter able to detect undiscoverable devices. You can find here a great presentation of what this is, build this dongle using open source plans and even buy his dongle.
It is possible to know whether a bluetooth device is around, even if he is in an undiscoverable mode, by knowing his full MAC address in the first place.
The technique is to try a PAGE request, sending all the 6 bytes that are composing the seeked Bluetooth host MAC identifier. A PAGE request allows one to connect with a Bluetooth slave when knowing his BT ADDR. Devices that are in undiscoverable mode does not respond to inquiry scan (device discovery intent), but they do respond to page scan which is used by a device wanting to connect to an another previously known device.
You might be able to do what you intend by using Bluesniff, a security proof of concept allowing you to discover hidden devices. It might support page scanning.
Note that this is to be taken as an educational resource, and I do not encourage this kind of practice in a commercial application.