Unfortunately, blood biography combined with magical checkins and a spell-based binary search (probably using spirit planchets and generations of "retired" agents as spirits) to locate bodies spells doom rather cheaply as government spending goes.
Blood bio, cast with a drop of a ctreature's blood, gives answers to:
Who are you? (The name by which the creature is most commonly known)
What are you? (Gender, race, profession/role)
How was your blood shed? (Brief outline of the events that caused its wound, to the best of the victim's knowledge)
When was your blood shed?
Finding the corpse will have blood in its wounds, which then provides a "brief outline of events." It is reasonable to assume that a brief outline will discuss the method of attackers. Which then, (papers please!) will link them to the last internal checkpoint by their class descriptions or other characteristics linked to their identities.
To be clear though, the public side of things will be absolute silence. Because the public doesn't know about this appearance of weakness, there will be no advertising the weakness. (Otherwise people get the idea that harming the secret police is possible, and we just don't want that...) Reprisals are fine and all, but an aura of omnipotence is better. If the team missed any of its checkins or procedures, their supervisor (to the function of his ability to have fall-guys) will be tortured to encourage the others. If there are some rumors, some of the "usual suspects" will be rounded up and executed for a trumped up charge.
In terms of team notification, every team will, being lawful, likely follow "modernish" police practice of "check in with home base." The logistics of this vary, depending on infrastructure.
- Visible tech: A napoleonic semaphore is not out of the question, especially with items of "whispering wind." (Given how cheap this makes individual messages, combined with the efficiency gains from modern communications and the ability to spy on the communications of a populace, I see no reason why a lawful evil society wouldn't have one of these networks.)
- A wizard did it: Telepathic Bond may be made permanent. Every squad of agents should be placed in telepathic bond with their controller "back at base". Given the communications capabilities that this implies, it's the cheapest possible communications network. An "empire" (evil or not) lives and falls on its communications, which means that there should be a correspondingly high priority assigned to this. We can assert, however, that the idea of battle-ready flying squads ready to teleport to help requests may not be part of the repertoire, likely due to infighting and other politics. Still, even presuming that these aren't "always on" (maybe the controller is managing multiple squads) squads should check in when before they expect trouble and after they're clear.
The players get one missed checkin as a grace period, Then a "ministry of divination" (I'm assuming nation-state resources) steps in with a series of spirit planchettes and does a binary search to find the last location of the missing team (as a function of the region that they checked in from). The binary search only needs to be of a region the size that locate object (remember, both a corpse, the corpse's robes, and the identity documents marked with a specific arcane mark are all items) can cover. Happily, the players removed some of the evidence there, but a corpse is still an object.
That binary search takes exactly as long as you wish, as it's a function of the resources invested into the "ministry of divination"'s binary search capabilities and whether or not the "spirits in the area" are favourable to which side. Of course, if I was an lawful evil ministry of divination, I'd make sure that the spirits in the area were particularly well disposed to me: any spiirt that provides a useful answer has their family rewarded with a lowering of quota or other "random" bureaucratic positive outcome. Any spirit that obstructs this will a) have their family harmed, and b) be otherwise removed using normal mid-level adventurer capabilities.
If I was doing this in 3.5, I'd make sure that the communications infrasturcture all had the necrotic cysts implanted in them so that the parent-cyst could scry (and remote take over) any of her agents whenever she desired.
Finding out why the elven magic has stopped working could be a very interesting adventure! The direction of the adventure largely depends on how magic "works" in your setting. This is only really limited by your imagination and what you and your players will enjoy. Here are just a few ideas to get your creative juices flowing.
1. Magic comes from the gods, it is blocked because they are unhappy. The god that grants the elves their magic is unhappy about their behavior or philosophy. This can be resolved by finding a way to appease the god, finding a new god or source of magical power, teaching the elves how to maintain agriculture without magic or even traveling to the realm of the god to give him a stern talking to (or even a spanking if you don't mind your players fighting gods).
2. Magic is being absorbed or blocked by something. This something could be a cult who wishes to starve the elves to make them weak, a large monster that is in hibernation and gathering all magic within a certain area to get strong so it can awaken or even a magical artifact from an ancient civilization gathering energy to explode or summon demons or transmute all bread into bunnies.
3. Magic comes from the planes. If you would be interested in some adventures traveling between dimensions this could be a good way to introduce it. The players have to track down a disturbance on another world or in between worlds where the connection has been disturbed. Maybe the amount of magical energy in the universe is depleting due to entropy and your players must find a way to replenish it.
Best Answer
My first major campaign was almost exactly this structure, and it was a lot of fun. The setup was, the land was in danger of destruction due to the loss of eight magical load-bearing MacGuffins, so the rulers of the land offered enormous prizes for anyone who retrieved one of the MacGuffins. In my case, the PCs weren't aware that the rival party were evil until around halfway through the campaign, but most of the methods I'll describe will work even if the PCs already know the rival party are evil.
Exit Strategies
The rival party doesn't want to get squashed by the PCs - they have a goal to achieve, and unless the players manage to set up a situation where the only possible way for the rivals to win is by murdering the PCs, the rivals will avoid direct conflict. They'll take alternate routes to those used by the PCs, or try to get there first (or let the PCs get there first, if a route is dangerous). If the PCs do manage to encounter them, they won't stick around to talk or fight - they'll have teleportation magic, flight, or other fast-exit options at hand, and will use them early.
Minibosses and Goon Squads
Like you, I didn't want my players to immediately kill the rival party, but I still wanted to have conflict with them. I did this by giving the rival party a number of minions in the form of goon squads (lower-threat faceless mobs), plus a couple of named minibosses. In my case, the PCs didn't know right away that the minions worked for the rival party, and had an angry aha! moment when they figured it out. In your case, you can use minions to build up (good) frustration in your players as they keep having to fight the minions rather than the rival party itself.
Side Arc Antagonists
Your PCs don't always have to be directly opposing the rival party or its minions themselves. Especially on a MacGuffin quest, you can add in side arcs: find the key to open the dwarven door in Mount Doom, traverse the abandoned mines to reach the Sage of Sight, get directions from the Sage about how to avoid the traps protecting the MacGuffin, etc etc etc.
In each of those arcs, the PCs will be fighting not the rival party, but a unique antagonist to that arc: the dragon whose hoard contains the key, or the goblin king who's taken over the mine. The PCs can still make progress toward thwarting the rival team, either in obvious ways (by getting the key first) or subtle ones (by convincing the Sage to give the rivals incorrect information). But they aren't ever in a situation where they could kill the rivals - only hinder them.
Common Goals
(This suggestion is less useful in your specific case, but including for completeness)
In my game, many, many "teams" (aka NPC parties) participated in the quest for the eight MacGuffins, and the specific rival group was only one of those myriad teams - albeit one which the PCs kept running into. Those encounters allowed me to hint at the rival party's true, evil nature, while the fact that all eight MacGuffins were needed to save the land meant that the PCs were more comfortable pointing the rival party at some other MacGuffin rather than outright killing them (at least until the reveal). By giving the appearance that the PC party and the rival party are working toward a common goal, you can build up a (maybe not-so-)friendly rivalry that isn't hostile enough to warrant murder.
tl;dr
When running a campaign with a rival party, give your players lots of antagonists to focus on which aren't the rival party themselves, give the rival party multiple effective exit strategies, and build in story reasons for the PCs to work with the rival party instead of murdering them outright.
One final note: your players may surprise you by finding a way to kill the rivals early despite all your precautions. If so, roll with it! Your plot doesn't have to be over just because the PCs outmaneuvered your villain. Add in a surprise Greater-Scope Villain who was using your original villain as a cats-paw, or a reveal that the MacGuffin itself is evil or dangerous, and the rival party was actually trying to stop it being unleashed, or some other twist. Your players will always surprise you, so make sure you're prepared to surprise them back.