From what I've read, there is good surf in Uruguay. You have to head out East to get to the surf though since Montevideo is actually on a river, not the ocean.
Here are two website where people have rated surf spots in Uruguay and included photos:
Wannasurf.comGlobalsurfers.comHere's a pretty good
video with highlights of a local surfing in Uruguay.
This
blog says Uruguay has the best surfing in the world (probably a little over-exaggerated)
This
forum post has a good listing of surf spots in Uruguay as well.
We're going to Punta del Diablo this weekend, so we'll let you know how the surf looks out there.