Sometimes the dwarven council member moves into the house just south of the monument. He can 'hide' in the shadows, so if you don't see him right away when you enter the house, walk around the inside near the walls and he should step out when you get close. One person reported that he moved over by the town crier.
For the prisoner, he should be in the house just south east of the mayor's house, locked up in the cellar (accessed by a hatch). I don't recall if you actually need to talk to him, or if he just provides a bit of background and a hint for where to go next.
You don't need to get the password out of the mayor; using it will get you past a sentry in the dwarven halls mine, but it is an easy fight that gives more experience than using the password.
A belated welcome to the forum.
