The demixing in an LCST mixture of PS/PVME (polystyrene/poly(vinyl methyl ether)) was probed here by melt rheology in the presence of gold nanoparticles which were densely coated with varying graft lengths of PS. The graft density for the gold nanoparticles coated with 3 kDa PS was ca. Sigma = 1.7 chains/nm(2), and that for 53 kDa PS was ca. Sigma = 1.2 chains/nm(2). The evolution of morphology, as the blends transit through the metastable and the unstable envelopes of the phase diagram, and the localization of the gold nanoparticles upon demixing were monitored using in situ hot-stage AFM and confocal Raman imaging. Interestingly, gold nanoparticles coated with 3 kDa polystyrene (PS(3 kDa)-g-nAu) were localized in the PVME phase, whereas gold nanoparticles coated with 53 kDa polystyrene (PS(53 kDa)-g-nAu) were localized in the PS phase of the blend. While the localization of PS(3 kDa)-g-nAu in the PVME phase can be expected to be of entropic origin due to expulsion from the PS phase as R-g,R-matrix chains > R-g,R-grafted chains (where R-g is the radius of gyration of the polymer chain), the localization of PS(53 kDa)-g-nAu in the PS phase is believed to be facilitated by favorable melt/graft interactions. The latter nanoparticles also delayed the demixing by 12 degrees C with respect to the neat mixture. The observed changes were addressed in context to enthalpic interactions between the grafted PS and the free PS, the entropic losses (deformational entropic losses on blending, translational entropic loss of the free PS, and the conformational entropic loss of the grafted PS), and the interface of the grafted and the free chains.