1. Sam is looking for his teddy bear.

2. Sam is looking for his toy bear.
(Are both OK? Which one do people use frequently, teddy bear or toy bear?)

3. You are sitting on my seat.
4. You are sitting in my seat.
(Which preposition do we have to use?)

1 & 2 mean the same thing. A stuffed animal shaped like a bear is usually called a "teddy bear".

It might also be called a stuffed bear.

3 & 4 also mean the same thing. I think we would say "in my seat", but both are correct. "On" is more correct. We don't sit inside a chair - that's where the suffing/upholstery is. :)