There are about 5 places these dwarves spawn. The first 4 spawns are random. They can show up in different orders or not at all. #1 happened most runs but I have seen runs where it did not spawn.
Here is what they look like. This image is of spot #2:
1)In one of the puzzle rooms leaving the door. You may need to be fast to kill them before they leave. I don't know 100% if they disappear yet or not, but it's easy enough to get them when you see them.
NOTE: These will respawn if you go back into the room.
2) On the big set of stairs in the big room. They will be on the right against the wall on the 2nd set of stairs.
3) In one of the connecting hallways. They will be on the right side of the room at the back. There is just 1 and he is in a collapsed doorway.
4) At the bottom of the broken bridge. When you drop off the broken bridge, he will be against the wall behind you.
5) In the room before the final boss. Also 2 rooms after the 2nd boss. You will need to jump up a few stone blocks to walk into the next room. There seems to be at least 20 in this area.
*NOTE*: These dwarves respawn if you die at the boss. You will need to kill them if you die.
After you defeat the boss (and lag that comes with him), the achievement will pop.