Right, with all the talk about the racism in Windhelm, and among Stormcloaks, I decided I would take a closer look for myself. This post will quote dialogue I figured might be relevant, as well as observations from my trip to the city itself. To be sure, I went in there as an argonian just so I had a big bullseye painted on my face. I'm putting the dialogue in spoiler boxes, and I'm aware the post is pretty "ugly". But it's all for the sake of getting things straight so there's less of the "I seem to recall" things.

Outside the city, I first run into the Stables. The owners are a couple of Altmer, no mention of racism.

Entering Windhelm I bump into the famous bickering between a Dunmer and a couple of drunkards (nords). Suvaris is the dunmer in question and she says the following:
Just so it is mentioned. Suvaris works at the docks, employed by the Shatter Shield shipping office.

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Next person is Brunwulf Free-Winter, who you will easily recognize as he is the one making the most obvious claims of racism in Windhelm.
Is this group of bandits really just a threat to non-nords? That seems a bit odd.

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So, my opinions after this little trip to investigate Windhelm is that the "racism" is aimed only at Dunmer, Argonians and Khajits.t
The Market

Niranye, Altmer Merchant
One of the merchants with a stand at the market.

Aval Atheron, Dunmer merchant
A dunmer with a stand at the market. Likely a shady one.

Nurelion, Alchemist, Altmer.
No mention of racism, but it is worth mentioning that he is an altmer, and judging by the fact he owns the entire building he must be a rather wealthy merchant.

Bumped into a guard saying:
Worth noting that a Windhelm guard actually directs me to a Dunmer merchant in the gray quarter.

Rolff, professional drunkard, nord.

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Gray Quarter
Observation: The houses are mostly in poor condition, but it should be noted that even the Dunmer have been given housing within the walls (protection) and not forced to live outside the Hold itself. Aside from this I also noticed a few nords strolling through at times.

Malthyr, Dunmer, assistant at New Gnisis Cornerclub (NGC)

Ambarys, Dunmer, owner of NGC
There is a set of Imperial armor upstairs in the NGC, this might be relevant for hostility towards Ulfric and the stormcloaks.


Revyn Sadri, dunmer, merchant
Shady? Insists he's not. Buys from caravans and adventurers.
Honest Merchant is plausible, wants ring returned.
No important mention of racism.

Idesa, Dumner, maid?
Takes care of Grimwald, a young boy from the Cruel Sea Clan. CSC obviously don't mind letting a dark elf look after their children.

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Docks
Most workers at the docks are Argonians, and it is pretty obvious that they are victims of racism and distrust. Is this attitude isolated in Windhelm though, or is this a regular phenomenon in Skyrim, or even the empire as a whole?

Scouts-Many-Marshes

Shahvee

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Palace of Kings
Ulfric doesn't really say anything that hints at racism as far as I can see.

Galmar

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My personal conclusion (so far):
The racism seem to be directed at Dunmer primarily, and Argonians/Khajits secondarily. I will leave the Beast Races out of this as their living conditions seem to be the same in other cities as well, so it wouldn't be entirely fair to throw this at Ulfric when it is in fact something that could be thrown in the face of any Jarl.

As mentioned, the Dunmer seems to be the one targetted. Now, can this be due to Nord/Dunmer animosity more than out of race? Because other elves seem to get by in Windhelm pretty well. They report the nords are suspicious of them at first, but nothing worse than this.

I also noted that the Dunmer might be slightly "whiny". They came with nothing, and they were given housing inside the Hold. I don't know about you guys, but the "squalor" they live in don't seem too bad with that taken into consideration. They still live behind the walls, and benefit from Windhelm's protection. That they were given the "slums" is not all that horrid as I imagine that would be were they could find available housing.

And before anyone calls me a crazyperson. I have a cold and had enough tea to soothe a angsty elephant, so doing stuff like this is allowed in that condition.

I already talked about this.

Be careful because people are going to call you a racist for trying to look at all sides.

You are such a racist for looking at this from all sides!

There is definitely racism in Windhelm. Anyone who says there isn't is blind. I argue that there is racism in the Empire as well, and all-around if you're a member of the beast races, you're going to be treated like crap. I'm not condoning it, it svcks, and is the reason I haven't made a Khajiit yet in this game. But using racism as a major reason against the Stormcloaks, to me, is faulty, because the Empire so often fails in this area as well.

The racism against the Argonians interests me more than the Dunmer. As far as I can tell, Ulfric doesn't mind the Dunmer and doesn't make an effort to remove them from the city. But he DID expel the Argonians. Why? Does he just not like them?

It may have something to do with the current hostilities between the Dunmer and the Argonians, a point that someone else on this forum made. For hundreds of years the Dunmer have massacred and enslaved Argonians from Black Marsh. With the eruption of the Red Mountain and the weakening of Morrowind, Argonians are finally retaliating and killing Dunmer as well. Needless to say, their relationship is currently volatile. It is possible that Ulfric expelled the Argonians in order to prevent violence between them and the large amount of Dunmer who populate his city. This, to me, is the best explanation, because there is no other evidence pointing to why he would kick the Argonians out and not, say, the Dunmer or the Altmer.

This is just speculation, of course. There is a large amount of evidence in the game that what Ulfric and the Stormcloaks respect most of all is hard work and usefulness, and generally respect anyone who can pull their fair share. That might be the key to eliminating the racism present in Windhelm. And hopefully the end of the civil war will help as well. I wish that there was some mention in-game about the hostilities between the Argonians and the Dunmer, and that there was a way to improve the lives of both in Windhelm no matter what side you join.

Racism was in full force in both Morrowind and Oblivion.
Now this very familiar and common aspect of TES reappears in Skyrim.
It is simply another part of TES.

And?

A lot of people tend to forget this. It svcks to be a beast race in the Elder Scrolls games. And now, it also svcks to be a Dunmer. Maybe because it's suddenly happening to the elves that people care?

To OP: Excellent post. Did you meet Ben Hlaalu, the farm owner? He is at the Corner Club in the evenings. Anyway, I'm sure the black horse couriers will offer you a job as an investigative journalist in their Skyrim branch .
But BIG thumbs up for being so rigorous in providing evidence and exact quotes.

Could be.
I remember, pre-OB release, a plethora of threads on what character people would be playing first. A majority of nearly 70% (if memory serves) were planning out Dunmer characters. Often stated, it was what they found most enjoyable in MW.

But I'm a chameleon.
In every series I play multiple characters of multiple races. Male Nord, Male Bosmer, Female Redguard, and Female Breton.
Those are my 4 most common builds. But note that none are beast races. I never enjoyed those. Ever. Personal preference is all.
Now, in Skyrim, my most enjoyable build is the Male Nord Cartographer. But he's usually my go-to character in every series since Daggerfall.

Nostalgia is sometimes seen through a bent prism.
Those who came to enjoy the beast races and Dunmer in previous TES games are finding Skyrim a foreign and unwelcoming land.

That's because it is.
But, like the others, it's just another TES game with racism still intact.
They're just noticing it more now that they're on the outside looking in.
One person's opinion. Nothing more.

I think more cosmopolitan Cyrodiil made players somewhat forget racial friction in the ES world. It was very low key there.

Just to clarify on Argonians. I wasn't trying to say there was no racism against them, I was putting that aside as it seems that's a much more common phenomenon and not a Stormcloak/Ulfric -specific one.

Leyawiin? It's count and countess? The Nord causing fights? The Argonian making racist jokes? Or, for that matter, the hidden torture chamber...

Damm Stormcloaks....

There is racism in Windhelm. Ulfric is also a cheap and sleazy bastard. Did you hear what he said after his speech at the end of the Stormcloaks? And

Did you notice the jail in Solitude? Torture is pretty prevalent regardless of city in Skyrim. Just listen to the litany of complaints from the Khajiit traveling merchants regarding Skyrim as a whole. Leyawiin wasn't great, but it can't hold a candle to Windhelm. Leywiin had a large number of prominent Khajiit and Argonian residents despite the countess.

Didn't hear that, as this was just a visit to Windhelm to note down what I could and not the entire the Stormcloak quest chain. Please do quote him though, but please leave any other vices out of the discussion.