Jacquie - The main thrust of your dream is about looking for your grandfather. But having looked the evidence of your senses leaves you with the thought, "He is dead."
Yet you still keep looking, "Hoping he is still alive." Was the hope for him to be still flesh and blood, present as a strength and support? Obviously he is not flesh and blood but often we do hope otherwise.
Perhaps you can feel him, his strength and presence deep inside you as the strength and love he planted in you. It is not something you can hold on to in the way you held his hand, but it is there and with care you can nurture it into growth.
Tony