I just returned so thought I would share some thoughts.....
1) Rent a car in Montevideo at airport. Well worth it and gives you the freedom to check out all areas in Punta del Este, Montevideo and in between. Drive is easy and well marked. Overall fairly good driving conditions. Drive from Montevideo to Punta del Este will take you about 1 hour 45 minutes. There are 2 toll stops enroute, each costs 55 pesos (about $2USD) so get money at the airport. There is an ATM at airport so easy to get cash.
2) Check out Montevideo. This was one of the highlights of the trip. About 30 minutes drive from airport, well marked. Park near port and check out Mercado del Puerto. Great spot to buy some souvenirs and you MUST eat at one of the churrascarias inside. The best meat I have ever had, and that says a lot being from Texas, now living in Rio and having traveled the world. They cook in open fire pits so you can watch your meat be grilled to perfection. My favorite spot is called Estancia del Puerto. Friendly staff (they speak Spanish, Portuguese and English so super easy) and delicious food. They also offer half portions whereas many other spots don’t. And a half portion is plenty for one person. Of the things I tried in my 2 visits, my favorites wee Colita de caudril (rump steak) which costs 360 pesos ($17USD) for half or 400 pesos for full portion and chorizo (sausage) that costs 100 pesos. And the Uruguyian chorizo is not greasy like Mexican chorizo. And wash it all down with a liter of local beer Zillertal for 150 pesos or the famous medio y medio (half chardonnay and half sparkling wine) for 80 pesos per glass. It is an incredible place and you won’t be disappointed. Then have a stroll in the old quarter around Plaza Sarandi where there are lots of nice shops and restaurants. End your time in Montevideo driving along the coast and stopping to enjoy the nice view. Makes for a good day. Or you can spend the night and enjoy a nice dinner and drinks at a local establishment.
3) Punta del Este is a beautiful small city on the water. Laid back with lots of beaches and mostly Argentinean tourists. Easy to get around and a car is a must to give you the freedom to check out the different beaches and areas of town. Very easy to navigate and tough to get lost given the small size of the town and the well signed roads. I stated at Atlantico Boutique Hotel (I paid $120USD per night). Awesome hotel, super clean, well appointed, nice staff and in a perfect location. Standing in front of the hotel on the corner, you can look in all 4 directions and see the water. Incredible. Short 5 minute walk to the main street with lots of shops and restaurants. And a 3 minute walk to the marina where you’ll find Moby Dicks, a great spot for drinks and live music. It’s the most happening spot in Punta. You can also check out La Barra neighborhood about 15km away which has a primary street with a few blocks of shops, bars and restaurants. I highly recommend Manatiales Fish Market, a cute restaurant right on the corner of the main drag and a small street. Beautifully prepared fish with great outdoor seating in a garden format and nice staff. The ceviche is to die for! Jose Ignacio is about 18km past Barra. Small town with an ok beach and a couple of restaurants. Good spot to visit if you’re in the mood for an excursion but I wouldn’t make it a priority. And beaches, there are plenty of beaches! Playa de los Dedos is a must see for a good spot to take pictures in front of the famous hand sculpture. It’s also a good beach for a sunbathing and a swim. Easy to reach just a couple blocks off the main drag in town. Also check out Playa Brava and on the other side, Playa Mansa. Both great spots to relax and swim. Punta Bellana is a few km up the coast from Playa Mansa and an excellent spot to have a fantastic view of the city. And in the evening, plan to go for a late dinner (e.g. 10pm) then hit one of the many night spots around midnight or 1am. Also, if you are a gambler, play your luck at the Conrad Casino. Hope you have better luck than I did! By the way, the casino tables only play USD so you can exchange money at the cashier then if/when you win, you can exchange it back.