This does drop off Aqualan Deepwaters. He can be found behind the waterfall as stated earlier. Just keep killing the aliens there and eventually he will spawn. It took 3 us about an hour and a half to get him to spawn. The graphics are cool. A spike in the middle gives it a look of its own.
Aqualon Deepwaters spawns near the waterfall in the hidden area of the zone. Our group kept killing all the mobs in the cave behind the waterfall and he eventually spawned. The paladin in our group was more than happy to get this shield.
It drops off Aqualon Deepwaters, NOT the named water elemental, Hydro. And this guy is around 50 or so. A 50 Monk and 53 SK took him down easy, but the SK was unable to solo even while fear kiting. He is not immune to Fear or Darkness spells.