The full question is shown above. We have to try and write coordinates of A and C in terms of a single variable which we can later eliminate, but I'm unable to accomplish this.
I tried using parametric equation of lines from the centre of square because we know A, C are $\sqrt{2}$ units away from midpoint. Let $(a,b)$ be the midpoint of the square at any time and line $AC$ make angle $\theta$ with positive x axis. We can get coordinates of AC from parametric form as shown $$\frac{x-a}{\cos\theta}=\frac{y-b}{\sin\theta}=\pm \sqrt{2}$$ Still need a relation between $a,b$. If we write equations of line BD using given information and find mid point of x and y intercept (which is centre of square $\equiv (a,b)$), we further get the relation $a=b\tan\theta$.
Clearly, we still have two variables $b,\theta$, thus, its not possible to find locus. Please provide an extra relation or an easier method to figure out the locus.

It is not difficult to prove (see figure below) that $\angle BOA=45°$. And one can prove, analogously, that $\angle BOC=45°$.
Hence $A$ and $C$ lie on the lines bisecting the quadrants, $y=x$ and $y=-x$.