。
She lost sight of her friend in the huge crowd.
Literal
She [topic-は] huge-crowd [genitive-の] inside [in-で] friend [object-を] lost-sight-of.
見失う is a compound 見る + 失う ('see + lose'), meaning 'lose sight of / lose track of.' The ~失う family of compounds is productive: 見失う, 聞き失う ('mishear'), 取り失う ('lose hold of'). 大群衆の中で uses 中 ('inside') with locative で — 'in the midst of a huge crowd.' 群衆 itself is 群 ('group / flock') + 衆 ('multitude'), giving a slightly elevated 'crowd / multitude' compared to the more colloquial 人混み.