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.com
Globalsurfers.com

Here'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.