Watching the cutscene in front of the poor quarters (Elrath leaves) and talking to the guard there = triggers Elraths open house.
Going to his house with out this trigger scene = door locked (lockpick or the key nearby)
Talking to the barman in the Blue Boar Inn about certain barrels <img src="/ubbthreads/images/graemlins/winkwink.gif" alt="" /> gives the clue where E. lives = door is locked.
So, getting into E.'s house: the best way is watching this cutscene and talking to the guard.
Warning:
You can enter his house with lockpick as often as necessary as long as you didn't have the final cutscene with E. in his house = triggered by taking the letter out of his cellar. After this cutscene no reenter possible anymore.
Kiya