McNally is a mini-boss fought in The Dust during the mission The Bane. McNally bought the Bane from Horace and it drove him insane, and he stays on the plain. When encountered he has a pair of scissors lodged in his right ear canal and some dinner utensils in his left. A a result, he has two streams of blood flowing at his neck.
After finishing the mission, McNally can be farmed for his legendary drop, the Hammer Buster. His house is straight ahead from the right side of the scrap pile outside Ellie's garage. He also dropped the Lady Fist on Day 18 of the Borderlands 2 $100,000 Loot Hunt.