The secret battle star can be found inside Polar Peak's castle.
Bird's Eye View
It's located inside the throne room on the north end of the castle.
Go to the left side of the icy throne and it'll show up!
Season 7 Secret Banner / Battle Star Locations
Fortnite Battle Royale's 7th Season's Secret Challenges reward you with Secret Battle Stars and Secret Banners! Hurry though as Season 7 ends soon! Don't miss this chance to complete the challenges before Season 8 launches!