Before going up the ladder to New Repugia East from the sewers, look to the left of the ladder to find claw marks on the wall. Talk to the NPC named Griff next to them to start the Creepy Cryptid quest.
This quest requires you to look for more claw marks spread throughout New Repugia East and New Repugia Downtown. Whenever you find a new set of claw marks, your character will say something about it. Equip the Wizard Costume and hold B to use its power and reveal the hidden paw prints nearby. The direction the prints go will point you in the direction of the next set of claw marks.
Go up to New Repugia East and follow the claws and paw prints until you find the last set and your character says "He went back down to the sewers!" Play through the main quest until you reach New Repugia Downtown where you'll find more claw marks to follow. You'll eventually reach a bridge across the rooftop and find the Wolfman hiding behind the door.
See the video below if you have any trouble finding any of the claw marks. Note that finding the claw marks and following the prints with the Wizard Costume ability is REQUIRED. Simply going to the location of the Wolfman without following the paw prints will NOT give you the costume or achievement.