Like most slang terms in the English language the term raunchy does not have a set denotation, but is interpreted differently by different groups of people.
The first definition is of something that is filthy or unkempt, with a clear trend towards things that have been contaminated by human use i.e. a raunchy gym bag full of dirty underwear. This is most likely to be used by the naive or uninitiated, whom are unaware of the word's otherwise strong sexual undertones.
The second definition deals with any behavior deemed to be lascivious or lewd, especially in regard to performance art or racy stage shows. Bawdy, Burlesque. This often extended to include sexualized speech or writing, which goes into excessive visceral detail.
Visceral detail seems to be the linchpin of the word's usage. Anything pertaining to bodily fluids, certain fetishes, bodily functions, or body odors is the domain of the term raunchy, in its purely sexual connotation. Certain practices (urophilia, anilingus, Bukkake parties) could also be termed raunchy.
The etymology of this word is unclear, but it seems to have originated in the Texas Air Corps. This word may be a corruption of the word Ranch, referring to the filthy atmosphere of most livestock pens.