from stratic's page on staining:
http://uo.stratics.com/php-bin/show_content.php?content=31012
basically you take the snake charming flute and double click it then click on the serp - if you play the melody correctly (yes, you can fail. although it doesn't use a charge if you do) you'll get a second cursor - use this to send the snake to an area you want it (close to you would be best since you have to be close to milk it). Next take an empty venom vial (a special vial made by alchemists with glassblowing, er - by special, I mean it actually is called something like 'venom vial') - double click the vial and target the snake - you'll either get a msg that you manage to milk it, or that you handle the snake but get nothing. You can only milk it twice before it's out of venom (kill it then for a further chance at a vial on it's body) although if you fail, you do get to keep trying. Finally, know that you get poisoned sometimes as you milk the serp.