ok either everyone is wrong or the candy is on multiple merchants. if you are looking for the npc that has the gnomish candy for enc 2.0, she is standing right outside the enchanter guild. use find path, find Nonnie Texaker (not our old friend Rilgor!). Now be careful if you have done the frog illusion quest, it makes you kos inside the guild! you will be ok tho, because the npc is not inside the guild. After you scale up the steep walkway to the "library mechanamagica" building, just outside the building, on the east side, is "Clockwork Merchant (Enchanter Spells)". This is the npc with the candy!
The npc that Kenneyv describes is the one that sells coffins.
Good luck!