Buy the "naughty versions" of the in-game models for as many girls as you can from Nigel, the spike-haired punk in the library/bad streets areas (maybe more, haven't finished the game yet).
Once you have unlocked the naughty versions, enable them in the Extras menu, then find the girls, and break out the camera (default control is P on the keyboard). wait for them to pose, take some snapshots when the meter at the top of the screen goes up, and fill your camera with pics.
Sell these to the kid outside the sorority house or sugarbear the pimp. I've found Zanna to be the most lucrative, getting 14 bucks per photo in just a few minutes time. Rinse, repeat.
I'm sure they get more valuable later on, I've only gotten the meter at the top of the camera to 4 out of 5...
The first appearance of porn fairy is in Greek Quad beside the Sority house where the peep hole is. Click the fart button or action button he will appear. The porn fairy is almost in each outdoor area hidden. As well as a few indoor places. Just keep clicking things. Each time you find him he gives you money or secrect tokens or mini game help items.
Peep hole near Sority house - Greek Quad
Alley below Larry's dorm window - Main Campus
Alley "Twice" - Crappy Streets
S & M Stage - Power Station V.I.P. Lounge
Few other locations cannot remember though