The following source material is from Fair Mormon and LDS.org.
http://en.fairmormon.org/Joseph_Smith/Seer_stones
It’s here where Fair Mormon admits Joseph Smith was known as the “Village seer” before the Book of Mormon was written.
Joseph as the village seer
Brant Gardner clarifies the role that Joseph and his stone played within the community of Palmyra,
Young Joseph Smith was a member of a specialized sub-community with ties to these very old and very respected practices, though by the early 1800s they were respected only by a marginalized segment of society. He exhibited a talent parallel to others in similar communities. Even in Palmyra he was not unique. In D. Michael Quinn's words: "Until the Book of Mormon thrust young Smith into prominence, Palmyra's most notable seer was Sally Chase, who used a greenish-colored stone. William Stafford also had a seer stone, and Joshua Stafford had a 'peepstone which looked like white marble and had a hole through the center.'" [9] Richard Bushman adds Chauncy Hart, and an unnamed man in Susquehanna County, both of whom had stones with which they found lost objects. [10] [1
During his tenure as a "village seer," Joseph acquired several seer stones. Joseph first used a neighbor's seer stone (probably that belonging to Palmyra seer Sally Chase, on the balance of historical evidence, though there are other possibilities) to discover the location of a brown, baby's foot-shaped stone. The vision of this stone likely occurred in about 1819–1820, and he obtained his first seer stone in about 1821–1822
And here was have information from Fair Mormon regarding how Martin Harris told a story where Joseph Smith finds a needle in a haystack using his magical rock.
Martin Harris recounted that Joseph could find lost objects with the second, white stone:
I was at the house of his father in Manchester, two miles south of Palmyra village, and was picking my teeth with a pin while sitting on the bars. The pin caught in my teeth and dropped from my fingers into shavings and straw. I jumped from the bars and looked for it. Joseph and Northrop Sweet also did the same. We could not find it. I then took Joseph on surprise, and said to him--I said, "Take your stone." I had never seen it, and did not know that he had it with him. He had it in his pocket. He took it and placed it in his hat--the old white hat--and placed his face in his hat. I watched him closely to see that he did not look to one side; he reached out his hand beyond me on the right, and moved a little stick and there I saw the pin, which he picked up and gave to me. I know he did not look out of the hat until after he had picked up the pin.
Joseph's mother also indicated that Joseph was sought out by some, including Josiah Stoal, to use the stone to find hidden valuables. He came for Joseph on account of having heard that he possessed certain keys by which he could discern things invisible to the natural eye.
Ok, so now that we know Joseph Smith, the Village seer, used his magical seer stone to find buried treasure and a needle in a haystack, and was known throughout the village for being a hirer seer, as was his father who taught him to use the magic rocks.
How were the stone(s) involved in the translation of the Book of Mormon?
There is considerable evidence that the location of the plates and Nephite interpreters (Urim and Thummim) were revealed to Joseph via his second, white seer stone. In 1859, Martin Harris recalled that "Joseph had a stone which was dug from the well of Mason Chase...It was by means of this stone he first discovered the plates."[17]
I had a conversation with [Joseph], and asked him where he found them [the plates] and how he come to know where they were. he said he had a revelation from God that told him they were hid in a certain hill and he looked in his [seer] stone and saw them in the place of deposit."
Here we have Fair’s admission that the plates themselves were found using Joseph Smith’s magical rocks.
Once Martin found a rock closely resembling the seerstone Joseph sometimes used in place of the interpreters and substituted it without the Prophet’s knowledge. When the translation resumed, Joseph paused for a long time and then exclaimed, “Martin, what is the matter, all is as dark as Egypt.” Martin then confessed that he wished to “stop the mouths of fools” who told him that the Prophet memorized sentences and merely repeated them
A parlor trick to fool Martin Harris maybe, but don’t you think Joseph Smith would know his magic rock from another that “looked like it”?
And it’s here when Fair admits the entire Book of Mormon was translated using Joseph Smith seer stones, and not the supposed Urim and Thummim.
Did Joseph lose the seer stone(s) and/or the Urim and Thummim?
Following the loss of the 116 pages, the Lord told Joseph:
1 NOW, behold, I say unto you, that because you delivered up those writings which you had power given unto you to translate by the means of the Urim and Thummim, into the hands of a wicked man, you have lost them.
2 And you also lost your gift at the same time, and your mind became darkened.
3 Nevertheless, it is now restored unto you again; therefore see that you are faithful and continue on unto the finishing of the remainder of the work of translation as you have begun.
4 Do not run faster or labor more than you have strength and means provided to enable you to translate; but be diligent unto the end. (D&C 10:1-4)
Thus, "it" (Joseph's gift) was restored to him, but there is no indication that the Nephite interpreters (Urim and Thummim) were also returned, Joseph having also lost "them." That is, after repenting, Joseph would recover his seer stones, but apparently not the Urim and Thummim. Some Church sources have seen this as the point at which Joseph received the seer stone for the first time, but this is likely incorrect:
As a chastisement for this carelessness [loss of the 116 pages], the Urim and Thummim was taken from Smith. But by humbling himself, he again found favor with the Lord and was presented a strange oval-shaped, chocolate colored stone, about the size of an egg, but more flat which it was promised should answer the same purpose. With this stone all the present book was translated.[24]
Ok, so we know Joseph Smith was the village seer and was arrested for it, and also used the same stone to translate the Book of Mormon as it is today.
Regarding where the magical seer stones are today, the Mormon church has them locked up.
Joseph's second (white) stone is also in the possession of the LDS First Presidency
From LDS.org on Gensis 50:33
http://www.LDS.org/ldsorg/v/index.jsp?h ... 82620aRCRD
1. The great latter-day Joseph
The Joseph Smith Translation of Genesis 50:24–38 contains prophecies that Joseph made about one of his descendants who would become a “choice seer.” The Book of Mormon prophet Lehi restated these prophecies in 2 Nephi 3:5–15. The descendant referred to in these prophecies is the Prophet Joseph Smith.
Discuss how the following prophecies made by Joseph of Egypt were fulfilled in the life of Joseph Smith:
• a. One of Joseph’s descendants would be a “choice seer” (Joseph Smith Translation, Genesis 50:26; 2 Nephi 3:6).
• b. This seer would be greatly respected by the other descendants of Joseph (Joseph Smith Translation, Genesis 50:27; 2 Nephi 3:7).
• c. He would teach them of the covenants that God had made with their ancestors (Joseph Smith Translation, Genesis 50:28; 2 Nephi 3:7).
• d. He would be obedient to God (Joseph Smith Translation, Genesis 50:28; 2 Nephi 3:8).
• e. He would be a great prophet, like Moses (Joseph Smith Translation, Genesis 50:29; 2 Nephi 3:9).
• f. He would be the means for bringing forth new scripture (the Book of Mormon) that would support and work with existing scripture (the Bible) (Joseph Smith Translation, Genesis 50:30–31; 2 Nephi 3:11–12).
• g. Although he would be weak, the Lord would make him strong (Joseph Smith Translation, Genesis 50:32; 2 Nephi 3:13).
• h. Both he and his father would be named Joseph (Joseph Smith Translation, Genesis 50:33; 2 Nephi 3:15).