He normally likes to hang out on Main Street during the day time. If you see a Cast Member with any of the characters in that area, they should know when/where he'll be coming out to visit.
Most commonly I've seen him in Town Square. If the Straw Hatters are performing (ask at City Hall) he comes out to do a drumming competition that's really a lot of fun.
We met him at DCA over near it's tough to be a bug.
ETA: He was the Hawaiian shirt Donald as said by the poster below.
You can always try your luck and ask at the Main Street Town Hall/Customer Services in the morning and they might be able to tell you when he's out that day
For "classic" Donald, I asked in ToonTown and they said he's only there for the early morning festivities and then he can be found on Main Street. You can find Donald in a Hawaiian shirt over at DCA in Bug's Land.
I forgot to mention that Daisy Duck was out in Toon Town as well. We were really surprised because in all of our trips, we have never seen her out signing. She was there earlier in the morning, before lunch.
I forgot to mention that Daisy Duck was out in Toon Town as well. We were really surprised because in all of our trips, we have never seen her out signing. She was there earlier in the morning, before lunch.
I don't know if it's still true (we last went to DL 3 years ago), but we've seen Donald several times in Toontown, right after the Toontown welcome ceremony during Toontown Morning Madness (am I remembering that name right?)
The characters dash off-stage, then shortly (within 5 - 10 minutes) reappear at other locations. Donald goes over to the belly of his boat to meet and greet.