The Underground Tail-Hunter is only mentioned as a picture of an egg in The Incomplete Book of Dragons.
Only the egg of an Underground Tail-Hunter appears. The egg is of a typical oval shape, slightly bluish in color, and a dark mottling pattern. The image seen also has a hatchling's tail coming out of it. The tail have long spine spikes and a spade tail.
Because the author's dragon names are typically quite literal, we might assume that the Underground Tail-Hunter is a type of Cave Dragon (underground), and that it hunts for tails. They appear to have their own tails, so its also possible they hunt with their tails rather than for tails.
Only the egg of the Underground Tail-Hunter appears, in the Chapter about Dragon eggs. It does not appear anywhere else.