How to display seconds in the taskbar clock?

This is not currently possible without using third party apps. While windows allows you to change the short-form and long-form of your default times (Control Panel -> Region and Language -> Additional Settings -> Time -> Short: hh:mm:ss tt), this change does not take effect on the taskbar clock.

As @CharlieRB noted, you can use the Clock gadget to display the clock on your desktop, or you can click on the time to see an expanded calendar/clock flyout with the time in seconds.

Currently it's not possible to make Windows 7 taskbar clock display the seconds without 3rd party app.

However, 7+ Taskbar Tweaker from http://rammichael.com/7-taskbar-tweaker adds this functionality with one single click: