Hi Dawn, I have a couple of ideas for you. I've looked at your online tree @ Ancestry and I see that Grace apparently remarries before 1930. So technically, her children are not orphans. Either she and James/Wm James divorced before 1930 or he died. Grace was much younger than James, by more than 25 years.
Minnie's findagrave memorial includes excerpts from her obituary, which states that her parents were William James and Grace Marie Reaska Clearwater. Unless they were quoting from her birth certificate she must have been old enough to remember her parents, suggesting that she and her siblings went to the ILSS Home closer to 1930 rather than soon after Louis's birth.
The IL State Archives in Springfield has the records from the ILSS Home. You might have to get a court order to access the records, but the files for Minnie, George F. and Louis should list the date they entered the home as well as whether their parents were still living:
Scope and Contents: Case files of children admitted to the school contain primarily correspondence concerning the child's admission, school activities, vacation plans, placement in a foster or adopted home, and final discharge from school. Usually included in each file are admission application giving child's name, birthplace, birth date, residence, date accepted at school, parents' names and father's service record; warrant of commitment; copies of court orders; physician's certificate and results of medical examinations; visitation record; intelligence and aptitude test scores; academic report cards; reports from professional staff on child's behavior and adjustment to school life; and data sheets on child's family history. Also found, particularly in files of children admitted after 1940, is material on child's family, including home visitors' reports on situation of child's parents and other relatives; correspondence with and concerning child's family; and copies of birth, marriage, and honorable discharge certificates.
A friend of mine got a court order to search records from about that time at another IL institution by writing to a judge from that county (in this case, McLean Co.) explaining what records she was looking for and the family connection. You might call the State Archives first and find out whether or not you need a court order to get the records you're asking for.
The 1920 census shows that James Clearwater works for the Railroad. The WW I registration also says he works for the railroad.
It's a long shot, but since you seem to be at a dead end, try looking at the family of Albert/Alvadore C Clearwater and his wife Flora/Florence in Crawford Co., PA in 1880. Albert was born in NY and Florence in PA. Albert/Alvadore's parents are William and Eliza Clearwater, both born NY. You can find them 1850-1870 in Orange County, NY. Albert is listed in 1880 as a brakeman on the RR. In 1900, Florence is a widow living with sons James and Edgar in Cleveland, OH. The boys' birthdates are recorded as James Mar 1876 and Edgar Mar 1882, although Edgar's WW I registration says March 1881. Both sons work on the RR. There was also a sister, Georgie, born about 1870.