It is located at the foot of the big flowers that grow near the hot lake where you zone into Cooling Chamber from Brell's Rest. If you look carefully, you will see a small, lighter colored patch which looks like fabric or a small honeycomb, at the bottom of the plant near the back tunnel. If you face that tunnel (which angles upwards) and look to the left hand side by the plant, it will be there. It respawns in a short time (maybe a minute or two). You cannot loot it from the plant directly, it must be on the ground (hence the name - "Ground Spawn." LOL
Hope that helps somewhat.