NoNewTaleToTell: Xenophobic? Psh, The Stormcloaks aren't xenophobic, they just want the right to worship Talos. If they were truly xenophobic they would've kicked the Dunmer out of Windhelm just like the Aldmeri Dominion kicked the Talos out of the Empire! But darn those Stormcloaks...the empire was getting nice and cozy (bending to the will of the Thalmor) before they came along!
On that note, Somebody needs to make a mod that makes the horse thief into an Argonian named "Arrow In Ankle".
Ah, that makes sense haha. In Skyrim there is a prominent family named the Greymanes/Graymanes (I can't remember the correct spelling...) and I thought your username was a reference to them.
Crewdroog: Please, they keep the argonians and khajiit outside the city gates, and the elves are kept in separate districts. If not for the Imperial guards keeping an eye on things, no one but nords would be there. Talos was just a means to an end.
Am I really debating this? lol! :)
It's the law across Skyrim (including Imperial controlled cities) that Khajiit (associated with caravans) are banned from cities. Argonians are free to live in Windhelm but choose not to due to the Dunmer (Dunmer and Argonians do not get along due to Dunmer doing Dunmer things in the past like enslaving the Argonians, taking their lands/etc/etc). It's confirmed by one of the Argonian dock workers in Windhelm (and in lore books). Also, if you're a Dunmer and you talk to the Dunmer who is being hassled when you first enter Windhelm she'll make a very rude (and completely out of the blue) comment about the Argonians. As far as the gray quarter, at least two elves (an Altmer and a Dunmer) in Windhelm say that the Dunmer more or less choose to live in the gray quarter and that it isn't as bad as the Dunmer there claim.
The reason why some Nords dislike the Dunmer is because they were taken in and given homes (and presumably were given help to start their businesses) after the Red Mountain incident and despite that, the Dunmer still consider themselves better than the Nords. Plus some Nords are actually just mad that the Dunmer won't join their side in the war. Oh, and the Nord that is worried about the Dunmer ends up as Jarl in Windhelm if you choose the Imperials which means he may just be trying to get their support for future need.
....Why the heck do I even know all of this?!