Would you be kind enough to explain to me the following paradox?
I looked the number up in the phone book.correct.
I looked up the number in the phone book.correct
I looked it up in the phone book. correct
I looked up it in the phone book. Incorrect
Thank you for your efforts.
No paradox, simply a grammatical rule of which you are apparently unaware: a pronoun standing as object of an adverbial phrasal verb (as 'look up' in your example) must always precede the adverbiaｌ particle, whereas a noun object may follow.