If renting before the By-Laws are changed to exclude renting of a Townhouse does the Grandfather Law allow you to continue renting after the initial renter has moved?

That would depend entirely upon the rules in your Home Owner's Association or condominium agreement. Many HOA terms limit such "non-conforming" uses to the first instance and cannot be transfered or modified without permission of the board. Others permit such a use (rental) until the owner moves back in for more than a prescribed period (90 days, 2 years, whatever).