The musty smelling note can be found by inserting 100 numulites into one of the stone chests inside the House on the Hill on Fossil Island. There is a chance nothing will happen or a spike shooting out and stabbing the player for 9 damage, wasting the numulites.
This note can be added into the Fossil island note book.
For an exhaustive list of all known sources for this item, see here
A miraculous discovery today - a pool, capable of rapid calcification. One of the young stumbled into it, looking for refreshment. The look of terror in its eyes chilled me to the bone as its soft tissue grew rigid - it reached down to free its feet and it drowned in its own, solidified saliva. Its body serves as a powerful market of the dangers of this island. We have witnessed such things before, but never at this rate.