Grey Dust is achieved by brushing the Ankh-Morpork Sandelfon temple's low altar.
brush altar with <brush>
The dust is brushed onto the ground, not into your inventory.
Brushes that can be used are:
Wire Brushes available from the plumbers' guild in Ankh-Morpork
Worn Scrubbing Brushes from the Genuan City Watch in Genua
The grey can be used for recharging magical artifacts, but it is very weak and just has 1% of the potency of purple mineral powder, i.e. 1 charge of a red staff requires 200 pinches of grey dust, roughly 7 1/2 handfuls of grey dust.
After the changes to recharge, grey dust is only rarely used since you need to have enough magical energy within the recharging materials to charge an item at least once, so grey dust becomes quite cumbersome. Before the changes, one sole pinch could be used to execute the recharge command and earn 30x the guild point cost of experience as a guild command.