You have the right general idea, but a couple of problems:
- The sample rate entering the DSD block (hence the output of the FM demodulator) must be 48000 Hz; this is hard-coded in gr-dsd. From your screenshot, you have 35k where you need 48k.
- The deemphasis (a.k.a. tau) of the FM demodulator should be set to None, rather than the default of 75.
In my experience gr-dsd will work for D-STAR. As a development strategy, first build an analog narrow FM receiver, test it on analog radio (e.g. on amateur FM or weather radio) to make sure the filters and rates are correct (you can hear the output, and there is no over/underrun), then add the DSD block to the chain.
Also note that it is possible for there to be a digital signal present but no audio to decode. Silence doesn't mean it isn't working; gr-dsd will print text whenever it successfully decodes packets.