So to be clear...the dragon can only dig up one chest per battle until you level up? It's not one chest per turn...when you do level up it increases the number of chest per battle you can uncover. The awaken dragon skill just increases the number of chests you can uncover at one time (per use is a better way of saying that?)

It is up to the level of the pet's ability. You start with 1 chest, when you level up the skill it will be 2, then 3. In general, you can dig 1 chest per turn, but a mage can dig 3 in one turn (normal dig + 2x awaken dragon). Nothing increases the number of chests uncovered, because it's capped at 3 per battle.

Early game i was noob and did not understand the value of treaure searcher. i kept upgrading his kick. and not i am getting all sort of upgrades new ability but no treasure searcher.
what can i do ? (except restart :P)

Keep on playing, you'll get it eventually :)

If you're on normal or hard, you should have plenty of money, so this is not a gamebreaking issue :)

Yup i am normal. and i guess have decent money. even though i had been reinforcing and buying troops a lot early. i am able to save now. and following your advise Dig Dig Dig in advanture mode :)

treasure searcher on normal is almost useless. Spend upgrade points on something else, like ball of lighting, stone wall, but never on treasure searcher.. if u play on hard maybe it will be useful (if u play with mage) for keeping your gold up, but i never needed it on hard. On impossible is very useful. And i never got a wanderer scroll on chests so far.. i only used treasure searcher on my first game lol, and playing on impossible.

I wouldn't say it's useless on normal at all, as you can get runes and the occasional scroll. Not that you really need the scrolls, but the runes are welcome.