On this page of the game guide to Borderlands 2 you will find a detailed description of the side mission titled Slap-Happy. You can start this quest in the Sanctuary location after the completion of the side mission named Mighty Morphin.
The Highlands Outwash
2) Pillar for Hammerlock's Arm
3) Exit from the water reservoir
Hear out Hammerlock , take Hammerlock's Arm and use Fast Travel to get to The Highlands Outwash. Jump into the water and place Hammerlock's Arm in the designated place .
Eventually you will attract Old Slappy. Shoot the marked appendixes/eyes on the enemy/s body and tentacles to score critical damage. The tentacles themselves should be used for Second Wind. Once you defeat the enemy, pick up Hammerlock's Arm  and head out of the water using the ladder . Now return to Sanctuary  to collect the prize for completing the mission.