Awesone! Ok so you talk the talk to the riff raff the best you can. Your contacts wish they could help, but he's a very small fish in this vast, crooked pond. They corroborate what the Sculptor mentioned and suggested you try any number of drug dens in Old Korvosa. The most popular one being, "The Dragon's Breath", one of a few permanently moored ships and definitely territory of some gangsters.
Grau is much easier to locate. He's still at the Library of the University of Korvosa. He's currently out front having himself a smoke. He's a lean, clean shaven Varisian wearing the Guard's uniform. Sergeant, if you remember your ranks. He's flanked by two other guards. One of them is discussing the point of devoting valuable Guard resources over a simple book theft.