> Why don’t data centers use gray water more often?

DCs will just use the cheapest source that meets their needs. If they have to treat greywater and that costs more than municipal potable water, they'll use the potable water. (In part this is utilities selling their potable water too cheaply.)

> Wouldn’t that be better for basically everyone?

No; if it was cheaper for DCs, they'd already be doing it. But it isn't an insurmountable cost -- DCs still pencil with slightly more expensive cooling.