After acquiring the quest from the Dancing Peacock, make your way over to the Mark Grand Court. Talk to him and he will explain that because you did such a great job last time, this time he wants you to do the same: find the headwaters, but this time in the Scarlet Pillars. Since your ship has the new altitude upgrade, you may go up a level to search for the source of the water. The point he is looking for is in grid A-1, very near the top of the map. The headwaters are found in A-1/2-3 of the Scarlet Pillars. Mind the Omnihunter neaby.