PokéBase - Pokémon Q&A
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they get a moon stone after beating team rocket in a cave

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>Evolutionary stones are showcased somewhat rarely in the anime, as only a relative few Pokémon are able to evolve by using them. Despite this, they were among the earliest of items to have been showcased in the anime, appearing as early as Clefairy and the Moon Stone, where a rather large Moon Stone appeared deep within Mt. Moon. It was being worshipped by a group of Clefairy who lived there, and was soon stolen by Team Rocket and ended up being blown up. The shards from it, however, rained down on the Clefairy and caused some of them to evolve into Clefable. It is also speculated in the anime that the Moon Stone was the reason why and how various Pokémon—Clefairy in particular—arrived in the Pokémon world.

They never used one on anything, it exploded and the Clefaries evolved. The Moon Stone appears as a flashback in Delcatty Got Your Tongue? but it was not used by Ash or Misty.
[1]: http://bulbapedia.bulbagarden.net/wiki/Evolutionary_stone#In_the_anime

sorry i typed Ash when i meant to type Red
Which manga? Iirc theres more than one manga series with a character named Red.
the pokemon adventure series volume 1 or 2 cant remember but they defeat team rocket with a rhyhorn that evolves into a rhydon and red gets it