After you get your Toxic Badge, you have to kick Team Plasma out of Virbank City and get rid of the Grunt hiding in Route 20. After that, you can take a ship to Castelia City.
When you first arrive in Castelia City, you and Hugh register each other in the XTransceiver. Hugh notices a weird sailing ship in the dock.
There are tons of items that you can get in Castelia City by walking around and talking to everybody.
First, go to the south end of this dock. There is a Heart Scale there.
When you go north from the dock, a clown walks up to you and gives you a bicycle. He says to look for three other clowns (a.k.a. harlequins). They are in the Medal Office, Passerby Analytics HQ, and the Battle Company.
At the dock to the west of where you arrived, talk to the girl in white to receive a Destiny Knot.
At the westernmost dock, you can ride a boat to visit Liberty Garden, but there aren't any items or new pokémon there to catch.
Go to Passerby Analytics HQ. It's on the same street where the harlequin gave you the bicycle.
In Passerby Analytics HQ, be sure to talk to the harlequin in the bottom-right.
Some of the people there will ask you for phrases. You can enter a greeting phrase, a thanks phrase, and a phrase that you say when you're happy.
Talk to the girl in the upper left and she asks you a questionnaire. Answer all of her questionnaires to receive a Soda Pop.
Talk to the nerdy guy in the upper middle part of the room and he will appoint you a statistician. You can choose which survey you want to use when your C-Gear is turned on and you pass by other players. If you answered the questionnaires of the blonde girl in the corner, they are added to the survey list.
Battle Company is on the same street as Passerby Analytics HQ and the Pokémon Center.
Inside, a janitor will give you the Exp. Share. When a pokémon holds the Exp. Share, it receives experience from all battles, even if it did not participate.
A girl in the corner gives you an item that helps your starter pokémon, depending on how you answer her.
Be sure to talk to the harlequin here.
You can go to the upper levels of Battle Company to have pokémon battles with some of the employees. Their pokémon are at a similar level to yours. First go to 47F.
Near the elevator, you find Clerk ♂ Clemens. He has a level 16 Growlithe. When you win, he gives you some Quick Balls, which works four times as well as a pokéball but only when used on the first turn of battle. After that, it acts like a regular pokéball.
Nearby, you encounter Clerk ♂ Gilligan, who had a level 17 Pidove.
There is also Clerk ♂ Warren, who has a level 16 Marill. He gives you Timer Balls after you win. Timer Balls become more effective the longer a battle goes on, up to four times as likely to work as a pokéball.
Be sure to pick up the Guard Spec. in the bottom left of this floor.
You will find Clerk ♀ Britney near the Guard Spec. She has a level 16 Budew.
Talk to the guy wearing glasses on 47F to receive a Scope Lens, which increases the chance of getting a critical hit.
Now go up to 55F. Approach the janitor and you will battle his grandson, who owns Battle Company. He is School Kid Neil, and he has a level 17 Eevee and a level 17 Herdier.
In the Castelia City Pokémon Center, a girl is blocking the nurse's desk. She will mention Geonet, which is the spinning globe in the Pokémon Center. You can check on the globe to set your location, which other players will be able to see if you pass by them with your C-Gear turned on.
Go to the eastern street. There are four streets going north through Castelia City that lead to Central Plaza. The eastern street is Castelia Street.
Go into the Game Freak building on the right. Go up to 22F. There is a Revive in the bottom left corner. You can battle a few Game Freak employees. They will battle you once per day.
There is GAME FREAK Nishino, who has a level 16 Clefairy.
Then there's GAME FREAK Morimoto, who has a level 14 Pansage, Panpour, and Pansear.
On the same street, go into the building and go up to 11F, where a guitarist will give you TM44 Rest. She recommends giving the pokémon who uses it a Chesto Berry so it will wake up right after it rests.
If you go north from any of the four streets, you enter Central Plaza. There is an old guy here. If you talk to him, he adds a Funfest Mission, "Train with Martial Artists!" If you turn on your C-Gear and tap Wireless, then Entralink, you can talk to the tree in the middle to do this mission.
North of Central Plaza, there is a street. Go into the first building and talk to the guy blocking the elevator to make him step aside. Take the elevator up to the 47th floor, then talk to the girl at the top left to get TM45 Attract.
In the building across from there, the guy in the lobby gives you an Amulet Coin.
In the building north of there, you find a Charcoal on the 47th floor.
North of the northernmost street, you find the gate to Route 4. When you go toward the top, Bianca arrives and gives you the Dowsing Machine. When you use this, it helps you find hidden items if there are any nearby.
Mode street is to the west of Castelia Street.
There is a Castelia Cone shop here. It isn't very popular right now, but if you buy Castelia Cones, people will notice. You can help boost the popularity of the shop by buying cones here.
On this same street, you find Studio Castelia, an art studio. Talk to the guy on the right to find out which type of Pokémon he wants to see. If you have that type, show him, and he will give you a free berry of your choice. You can only do this once per day.
On Narrow Street, which is west of Mode Street, a guy will shout from behind a dumpster and then give you TM70 Flash.
Visit Café Sonata on this street and talk to the bartender to receive a free Moomoo Milk.
Gym street is the westernmost street of Castelia City, and it's where Burgh's Gym is.
The Name Rater is in the northernmost building of Gym Street. He can change your pokémon's nicknames.
The pokémon massager is also in this building. She can give one of your pokémon a massage, which will make it happier. She will only give one massage per day.
On 2F of this building, you find the Medal Office. One of the three Harlequins is in here, so be sure to talk to him.
On 3F of this building, Fennel has a new laboratory. You can learn about Game Sync here. For more information, read the Pokémon Dream World Guide.
Go south along Gym Street and talk to Clyde, who is standing in front of the gym. Iris comes by, and when she hears about Team Plasma, she goes to a place where suspicious people might hide. Clyde thinks she went toward the Pokémon Center.
Go east from the Pokémon Center to find Iris. Follow her until you reach Thumb Pier. Iris shows you the entrance to the sewer, where she thinks Team Plasma would hide. Hugh shows up. Tell him that you haven't found Team Plasma. Hugh will go into the sewer to look for them.
Go into the sewer to help Hugh look for Team Plasma.