(I'll try to gather all reported info into this post and the mirror Wiki article...)
Reported behavior:
Hounds can appear in both quests and wilds, including the Solo quests in The Harbor, starting at Level 1. It seems there is a timer (~5 minutes?) before the first appears. starting
when the first party member enters the quest/wilderness.
There is a "howl" that all can hear that announces their imminent arrival. Some short time later (observed as short as ~5 seconds before the Hound appears, but perhaps occasionally also much longer?) a random(?)* party member becomes "hunted". For a second or three there is a blue arrow pointing down at the target, and they receives a debuff "Target of the Hunt", visible in their de/buff bar at the top of the screen.
(* Several times, the "last" party member was observed to be targeted, someone who had fallen behind the main group or had entered late - but it's not clear if that was a factor in the target selection.)
In any quest* or Wilderness, Hounds spawn up out of the ground, and "on the trail" of their target, i.e. where that character has recently been (or where they currently
are if they have stopped long enough at the wrong time) before beginning the chase. This can include spawning in water (tho' it's not been reported that they attack in water). They can "wait" (for an unknown time, but at least a minute) outside a Wilderness quest entrance after targeted party members have entered.
(* This includes previously "non-combat" quests such as Baudry 1 & 2, etc. It appears nowhere is safe.)
Hunting Hounds are strong and tough, but they are not particularly fast - they can be kited fairly easily (observed w/ standard +25% run boost from
Anger's Step). However, they
will teleport to their target if it is "too far" away, similar to some Reapers. (Note - when they do t-port, there is a short "pause" before they become active again, allowing the target to gain some small distance on the 'Hound before it attacks/chases again.)
It's very possible to have
Champion Hounds, which only makes them worse (red named cannot be crowd-controled, etc.) Unlike normal monster champions, this starts in
Level 1 quests. Champ Hounds can drop rems (rem chests have not (yet?) been reported).
It's possible to pull the aggro off the original target.
Any party member can receive an appropriate "elemental" debuff, one or more stacks of
''X Vulnerability, +20% damage'' - and it stacks 20x!
Estimated cooldown between hunts ~5-10 minutes (unconfirmed). Finishing a quest does
not stop this timer. It's 100% confirmed that Hounds can spawn after a quest is finished - do not dawdle at the end chest - get your loot and get out!
(more info as it comes in...
)
Suggested Tactics:
1) Stay with the herd - er, stay with the group! Strength in numbers. Do not zerg ahead, and
definitely do not fall behind or go off on your own!
2) Keep your head on a swivel - keep looking behind the group, anywhere you've been,
especially right after you hear The Howl.
3) Apparently(?), these things do not scale with party size - do not solo, try to quest only with a (nearly) full party.
4) Treat the hound as a dangerous Champion or Reaper - kill it first!
5) If you hear a howl, let the party know. If you are Hunted, let the party know!
6) If you observe party members who do not "help" Hunted members - it's your call what action to take, but consider your options.
7) If your build starts off weak at Level 1 (or you just want to get stronger before risking hounds), you can do the quick Solo quests in The Harbor. If you dawdle, a Hound
can spawn in those Solo quests, but if you do the quest efficiently it seems you're out before that can trigger. You can easily get Level 2 this way (with just a little repetition), and it's possible to get 3 (with a lot more).
8) The Hunt timer keeps ticking after a quest is finished. Get your loot and get out!
Good luck!