Under floorboards or in the celing
In a pregnant women
Watahaki is a green coloured mushi. It's form looks like green cotton which floats through the air.
It enters the body of the pregnant women and becomes parasitic upon the ovum and destroys the ovum. The women then gives birth to it in the form a green slime which quickly escapes through the below the floors or into the ceiling.
Six months later it sends a fungus in the shape of a baby called Hitotake back to the parents. The hitotake are connected to the main mass of Watahaki and are used to gather nutrients for the main body that is the Watahaki.