Deadeye Dave probably has a file on Pegnose Pete, if only you knew the alias he used when he ordered his noses.
Did you notice what happened the first time you talked to the proprietor of the Palace of Prostheses?
He sniffed you and said, "You smell new."
That's right: he recognizes people by smell.
The handkerchief that Pegnose Pete left behind has his smell on it.
Sadly, Deadeye Dave has a cold, and needs an amplified version of the smell.
You'll have to reproduce the smell yourself, then.
Examine the handkerchief.
Repeatedly.
You'll discover that it smells of: hickory-smoked fish, flowers growing in a cesspool, fish snot, a corpse in a bog, a lumberjack's armpits, and a faint whiff of something nice.
You've got to reproduce this smell by gathering the appropriate ingredients.
Start by getting an empty spritzer bottle from the Scents and Sensibilities stand.
Then try to find the above listed smells.
The next clue will tell you exactly where everything you need is, so beware.
For the hickory-smoked fish and fish snot, use the spritzer bottle with the free bait in the Bait Shoppe. For the smell of a lumberjack, get the wood shavings from the House of Sticks. For the corpse in a bog and flowers growing in a cesspool, collect some bog water from the puddle in the Mystes o' Tyme Marshe. For the faint whiff of something nice, get the yellow flower from the front yard of Ozzie Mandrill's house. Put them all in the spritzer bottle to recreate Pegnose Pete's smell.
Once you've done that, spray the Pegnose Pete perfume on Deadeye Dave.
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