Good point about the moving effort required. But if moving an object takes constant time, then it's O(n) overall -- since <incorrect argument deleted>.
EDIT: My earlier analysis was wrong (it assumed you never move the beeping item after the initial halving), but the conclusion was right for a different reason: Each time you move items, you move half as many as you did last time. You initially move n/2 items, and the geometric series n/2 + n/4 + n/8 + ... + 1 sums to n-1. So O(n) moves are done, and this dominates the log n term for the number of steps.
EDIT: My earlier analysis was wrong (it assumed you never move the beeping item after the initial halving), but the conclusion was right for a different reason: Each time you move items, you move half as many as you did last time. You initially move n/2 items, and the geometric series n/2 + n/4 + n/8 + ... + 1 sums to n-1. So O(n) moves are done, and this dominates the log n term for the number of steps.