I plan to visit southern thailand in sept is it possible to visit and stay with indigenous people in villages or is this more feasible in the north. also is it possible to dive in the andaman coast at this time or does the monsoon season not permit this??

You'll not find too many indigenous people around the South, more like to find them in the North.

There are some good dive sites at this time of year, but most are a day trip away from Phuket. Contact some of the on-line dive shops for specifics.