the advisor does not look for open lands, nor any available land inside your territory
it says something like this
"your city is ready to expand"
which means, your city have grown to about 4-6 population with plenty of hammer production/food production, so u could build settler easily
similarly, for worker, the advisor does not check whether u have workers around or not,
i just built a worker last turn. and also got another worker coming to my new city, with all unimprooved land, then the advisor said, this city has many unimprooved land, recommending building a worker(but i just finished one), in this case, it only check for unimprooved land,