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Every 50th kill of this enemy drops Possessed Armor Banner.when and where it spawns
It needs Hardmode and nothing else. After that it walks the surface once the sun is down and haunts the underground at any hour, with no event, item or biome attached to it. That makes it the Hardmode answer to the zombie, filling exactly the same slot in the night with a lot more menace behind it.
doors will not stop it
Ordinary night enemies only force doors during a blood moon. This one opens them whenever it wants, so a wooden door on your outer wall is a formality. If your base sits on open surface in early Hardmode, either put something solid between the outside and your NPCs or accept that a suit of armor is going to let itself in.
fighting it
It is quick, it blurs as it runs, and it will outpace you on foot, so trading blows while backing up rarely ends well. It does flinch, though. A weapon with a high rate of fire keeps it stuttering in place and effectively pinned, which is the whole trick against it while your gear is still catching up to the new tier.
trivia
The suit it wears is the Ancient Cobalt set with an iron helmet dropped on top.