Go down from the turret opposite of the one you exit to the Dragon Bridge from the Taurus Demon's area, you need the Basement Key to open it though. Just keep going down, be wary of Poison Hounds and Hollow Thief ambushes, save the Sorcerer(he's in a house near the fire at the bottom of the area that has a corpse fire in it. The merchant is further on, when you get to a moat like area(don't go through the white light, leads to the Capra Demon, small space with very aggressive enemies). In that moat area, you'll see stairs on the left leading into a tower. Be wary of the archer there, at the very near top is the aqueduct pipe that has the merchant. She's to the immediate right of the entrance, be careful not to attack her. Also, if you go a little further in you can open a door that gets you back to the original entrance of the Undead Burg and back to the Firelink Shrine.