You would normally say 'You look confused', even though the action is temporary and immediate, which usually takes the -ing form. 'You're looking confused' is not wrong, it just doesn't sound quite right because it's not as often used. You can say 'Are you looking for something ?' , or 'You're looking smart today', as well as 'You look smart today', or ' How do I look ? ' 'Look(ing) ' is an irregular verb in this respect, and usage is idiosyncratic - it doesn't follow the rules, it's just a matter of customary use.

Either is fine. 'looking' suggests a longer period. So you would perhaps say that to someone who has been (say) looking for something for a while. Whereas 'look' might be more appropriate if you had just said something to them, and they looked confused (momentarily) in response to what you just said.