This answer addresses the question of how to find the burial site.
The difficulty with locating vital records for anyone is that while a person might live in one location for a long time, they can die anywhere. You have some family tradition about when and where your great-grandfather might have died and where he might be buried, but so far a direct search has been unsuccessful.
In cases like this, I try to find out more information, because you never know which clue will be the one that leads to the record you want. So instead of searching specifically and directly for the information you want, review your previous work and see what other information you can discover. The basic principle is to Start With What You Know and to make small steps from that point, instead of trying to make a big leap. You want to have enough biographical information on hand to be able to recognize your great-grandfather when you find him, instead of getting him confused with some other person who has the same name.
To make a research plan, take the information you already gave us in your question, plus any other information you have, and do the following:
- Make a list of all the records you have collected so far.
- Extract the information from each record and make a timeline of the events relating to your great-grandfather and his immediate family. Make a note on this timeline of which source the information came from, so you can refer back to it as needed.
- Search for more evidence that confirms the information you already have.
- For each new record or piece of information, make a list of research questions and ask where/how you can find out more information about that topic.
- Fill out or refer to a source record checklist (downloadable PDF) and references like Sources of Genealogical Information or the FamilySearch Reference Wiki's Resource Checklist to get ideas about other things to search for. A place search in the FamilySearch Library's catalog will show you what you can find on FamilySearch or at a local Family History center, and the subject headers could be used to search for holdings at other libraries.
Why go through all this? If you have a richly detailed picture of a person's life, it is easier to find more records about them. If you put the information into outline form, it is easier to see what you have and what else you might be able to find. It also gives you a strategy to search newspapers for an obituary or funeral notice without searching for your great-grandfather by name.
German surnames in particular can pose difficulty because of variant spellings. I found one obituary by searching only for the date range, her first name, and the phrase "born Germany". I found another by accident while searching for records about her son (I found his son, who had the same name, as a bearer at the grandmother's funeral). Since then I have found other obituaries as a result of searching for friends, relatives, and associates, who were listed as a survivors of a relative or as bearers at a co-worker's funeral.
For one focus person in my research, I was able to fill in the gaps between census records with city directory information that told me his employer. From newspapers I was able to gather information about when he retired and the timeframe for when he moved to Florida. This made it easier to find his obituary and to confirm that the death records I had found in Florida actually belonged to the person I was looking for. If I had just kept looking for death information in his Massachusetts hometown, I would never have found anything.
So instead of starting with the clues in the 1942 Draft Registration card and trying to leap immediately to records on Find A Grave, etc., try instead to find out more information from the early 1940s. Can you find City Directories, newspaper articles, employee newsletters, or other local resources? Do you have the names of siblings, friends, neighbors, and associates? Can you work towards the 1950s year by year? Can you narrow down the window by searching for your great-grandmother, and finding records where she is listed as his widow?
If your grandfather was buried in a pauper's grave, there may not be an obituary or death notice, but if he had siblings, you might be able to get clues about the date your great-grandfather lost contact with the rest of the family by seeing if he is listed in his siblings' obituaries as a survivor.
Cemetery and Burial records -- Resources:
Newspapers and Directories: