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Oh, yeah that Chansey guy is really wierd. I mean, you could probably take everything in his house along with the lucky punch and he wouldn't notice. Except for the Chansey, he needs it for inspiration.
You can find it the minute your screen on the left top hand says you entered "Seavault Canyon" which is above the Tanoby Ruins and below and to the right of the Island 7 Pokecenter