Mr. Thoth is a 91-year-old resident at Vesperhaven Nursery Home, which Inverarity owned and which is located outside of San Narciso. Oedipa meets Thoth there by total chance. He has just woken up from a dream about his grandfather, which he proceeds to confuse with the Porky Pig cartoon that he is watching.
Thoth explains to Oedipa that his grandfather was a rider for the Pony Express, and that he was also an Indian killer. Oedipa immediately thinks of the Wells Fargo massacre, and she asks Thoth if his grandfather was ever attacked. He tells her that he was—once—by a bunch of guys posing as Indians. The men wore feathers dyed black by burned bones. Thoth then tells Oedipa that his grandfather cut off one of their fingers in the fight, and on it was a signet ring. Thoth shows the ring to Oedipa, and she sees the symbol of the muted post horn—the Tristero symbol. Dum dum dummm.
In many ways, Oedipa's encounter with Thoth makes little to no sense (welcome to The Crying of Lot 49, Shmoopers). She stops at the nursery home on a whim, where—bam!—she bumps into a man whose grandfather may have been attacked by Tristero. The scene seems to anticipate the night during which Oedipa wanders through San Francisco and sees Tristero everywhere. It's difficult to tell if she is hallucinating, or if someone is playing a joke on her. Later in the novel, Oedipa has stopped taking such things for granted and decides that she will not go see Thoth again. She just assumes that he will have died or disappeared.
"Thoth" is meant to sound German in the book, but it might also refer to "Thoth," the Egyptian god of wisdom and language. It would be a fitting allusion, since Thoth's main contribution to the story is to show Oedipa the Tristero symbol, which she spends much of the book trying to decode.
One thing to notice is that, like Manny Di Presso, Thoth tells Oedipa about a real atrocity: his grandfather was a brutal Indian killer. Yet Oedipa glosses over the real atrocity because she is much more preoccupied with the (possibly imagined) conspiracy of the Tristero.