Many people think that the seer is a useless no good loser.  However, if you know how to use him/her/it properly, then they are a very valuable ally indeed. I will refer to the seer as a 'he' just for simplicity's sake. This information is courtesy of Vorlin & mel.

Two tips with the seer:
1) It is advisable to have a decent amount of money, as the seer likes to waste your money, and isn't brilliant in most cases anyway.
2) When the seer gives you a location, go to that location and start an outwards search from that point.  The monster/item should generally be found at/very near the location specified.

Using the seer for Monsters
The seer can give you several responses after searching for a monster, but  unless he says "I'm almost certain the monster is currently at this location", forget it, try again.  If you repeat the process a number of times (5 or so) you generally should get the above message.  It is currently assumed that the seer looks for the monster you want, and tells you the location if it finds one.  If the seer cannot find one, then it appears that a monster of the type he is looking for is created by the game!
You should now be able to find the monster you are looking for.
Note that using this technique in SP to create rare monsters(such as the Tengu or cutthroat) to complete Kill Tengu/Cutthroat bounties will not work, as these bounties refer to a specific creature - which is not a seer created monster.  You can however, use this for return Tengu/Cutthroat bounties...

Using the seer for Items
This one is a bit more complicated. First off, there are many items that the Seer just won't find. This does not indicate that the item is only found deep in the dungeon. A good example is the dwarven hammer, which can be found on level 5 and yet the Seer says is beyond his power. In cases like this it's best to ask on the demise message board what creatures carry that item, then see if you can use the Seer to locate them.
If we are trying for an item the Seer can find, submit your item name.
The seer has two ways of wasting your money here:
1) The Seer will immediately kick it back to you with a 'try again' sort of message. This is just a cute trick to waste your money, and the only thing to do is try again.
2) Another one is more subtle, the Seer will act as though it performed the search and will tell you it got no results, but in fact the search was not performed.

A true Seer searches takes several seconds (I'll get a Windows hourglass while it goes on) while it actually scans the dungeon looking for the item. If you don't get this hesitation then you'll have to repeat the search again. It can sometimes take 4-5 tries before you actually get a legitimate search from the Seer.
When you finally get a legitimate search from the seer it can yield 3 basic types of information.
1) The Seer can't find it.
2) The Seer gives you the names of some monsters that typically carry the item.
3) The Seer gives names and also gives location coordinates. So far, every time I've gotten location coordinates I've found the item.