Am I missing something? I can find plenty of tusks, but I just don't know if I can make them into powder myself or do I have to find them for sale?
There is currently no way to break down mammoth tusks to get powdered tusks. The only way to obtain some is to purchase it in an alchemy store or to find it as loot. Source
Or if you are desperate for some and are on the PC, you can do it via the console:
player.additem 6bc10 [amount you want]
You can actually find some, Somewhat rarely in the camps of the giants and their mammoths. There was a quest where you had to get some by going to a giants camp, and by going to other camps I have come across some, but not much, the other way as described above is buying it at alchemist shops but they only sell 1-2 at a time and that is too quite a rare buy.
Good luck with it.
You're going to love this; after playing Skyrim long after anyone else would have been done with it, I discovered the solution to this and many other perplexing scavenger hunts is to call up your objectives, select the one you want, and press the "X" button (if you're using an X-Box controller).
I know the screen won't actually let you select anything here, but click on it anyway, it still works. The map appears with your destination already centered. The powdered mammoth tusk is located in a stone bowl in the giants camp. You can't miss it because an arrow points directly down at it.
This quest is one where you can't cheat to get what you want. If you already have the powdered tusk, it disappears from your inventory for the duration of the mission. If you use the command console, you may get the item, but it won't fulfill the requirement! Using this function takes the trouble out of it, though.
The normal function of the X button, for those who don't have an X-Box controller, is to sheath your weapon or take it out.