I can't believe it's a seat issue because when I put the bicycle on my bike stand and turn the cranks, I can reproduce the sound. I'm still hoping someone out there can support the idea that this is actually a hub issue (Sturmey-Archer S3C, 3-speed with coaster brake). I'm thinking now of sending the rear wheel off to a shop that can diagnose and rebuild the hub, but after some preliminary searching, it sounds like a pretty expension proposition.
Terry