"I am actively looking for jobs at other firms" is not an answer to the question of "where do you want to be in your career", except insofar as it can be read to imply an answer of "not here".
So, it was honest, but not really (except indirectly) an answer to the question asked, and quite likely, in any case, not the most productive and relevant honest answer.
If the reason other opportunities were being sought is that those opportunities offered features X, Y, and Z that the employee's current position didn't, an honest but more direct and relevant answer would be "I'd like to be doing more of things like X, Y, and Z". That would directly answer the question, and provide something positively actionable by the employer, and be no less honest than "I've got my resume out and am actively looking at outside opportunities".
There's two possibilities (based on the scenario as described): either the employee was fed up with the company and really wanted out, and then the answer given was not only honest but reasonably relevant (if somewhat, perhaps diplomatically, indirect), or the employee had particular things they wanted in their career that they weren't currently getting, and failed to give the most relevant perfectly honest answer to the question asked, and instead gave an incomplete, tangentially relevant non-answer which implied an unfortunate and inaccurate answer to the question actually asked.