Deep in Mount Sternum, in a empty cave that is located under some Cave Rats (can also be reached through Ancient Temple), in an unreachable 2 sqm area with some tombs on the Undead cave, in a cave with a slime, in a cave down after Giant Spider, in the dragons spawn. Also has been found in the area with the mummies and ghost (probably roped from the dragons area). It may still have more spawning places under Mount Sternum. Normally you need to use a pick to find the caves.
Strategy:
Since the Christmas Update 2007 he can see invisible players and he is stronger against physical attacks. Death damage and fire damage do well against him, maybe ice damage too.