There's an old begger-looking bloke just above where you found the guy who was buried. Threaten him and he'll spill his guts - then you can find the man in red in the southern part of the bridge district.
Uncle Lester is just a distraction. You don't get anything from killing him, so I didn't bother. Doesn't make any difference whether you do or don't, though.
And the blokes in the inn - they're part of a quest you can get through the Limited Wish spell, I think. Never done it, myself.
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