I have spent many a long hour in runny. It does drop, off of Pickclaw Spellslays and Battlewizard Unak. But as far as I have seen it is the rarest drops in the dungeon short of the Lord Pickclaw only drops. You get a piece of dark muslin in one out of about every 8 spellslays/unaks. Best thing to do is go down and advertise for it, most people who get it dont want it. Funny part of the matter is that Dark muslin appears to be rarer than Black Alloy medallions.