In the upper-most level of the tower of orthanc, where you fight Saruman, go down to where you speak to him, and then go North-East to a flight of stairs at the top of the screen. Go up the stairs and to the left. There will be a chest, open it and the artifact, Saruman's Palantir, will fall out. Do not defeat Saruman until you have done this or you will not be able to go back.