An ember radiating a dull light.
This flame seems nearly exhausted,
but exhibits an eerie resilience.
Perhaps this is its ordinary state?
When given to Steady Hand McDuff, he will become available as a blacksmith/merchant who can infuse weapons.
Dark Souls II: In Iron Keep, from the Smelter Demon fog wall, head directly away and jump onto the area with the chest. From there, jump down onto the partial staircase to find the Ember.
Dark Souls II: Scholar of the First Sin: In The Lost Bastille: In a chest next to the The Tower Apart bonfire where you are dropped off after fighting the Pursuer.