A couple of litres would be enough for that amount of grain. You could wrap the grain in something like a chux cleaning cloth or similar. They sell grain and hop bags fairly cheaply, for the purpose of steeping grain and hops. It depends on your process as to how much water you want to use. I like to boil up the whole volume of water to prevent the possibility of infection.
From there it is quite easy to add 500 grams of base malt and get straight into a partial mash. Before you know it you will be wanting to start on an all grain BIAB. Any amount of grain steeped with your extract brew should give you improvement. Just don't go overboard with the amount of dark crystal grain to start with.
Cheers.