Name: Michele Roth N.E. Indiana - Zone 5b, and F (Zone 9b) I'm always on my way out the door..
I'd remove the seeds if I were consuming fresh hips.
A liquid extract is made by slow-simmering the hips in water to yield a concentrate. I've never done it myself, but I'd imagine that you'd just strain off the simmered liquid after it's reached the desired consistency.