He's outside, and you should notice a difference when he is there, to when he isn't without having to run up and check. It takes sooo many goes sometimes though and you'll have to keep leaving the whole area and coming back (not just going in and out of the Gold Saucer entrance).

I can't remember what it looks like exactly but I'm sure he's definately visible as something. If you go there and everything looks normal check by going up the hut and pressing everywhere, if he's definately not there then, you should notice when he is.