Consider using a regular expression:
import re
pattern = re.compile(r'\b(?:' + '|'.join(re.escape(s) for s in seed) + r')\b')
pattern.findall(line)
\b
matches the start or end of a "word" (sequence of word characters).
Example:
>>> for line in docs:
... print pattern.findall(line)
...
['words with spaces', 'bar']
['foo', 'bar']
['bar', 'bar']
[]
[]