The magic arachnid is an aptly named giant arachnid living in the Geysers of Gygax. It was only shown for a small amount of time, when Ignus tried to help the Great Wizard Greyfarn (BG). Ignus mistook it for a magic bug, for which the Wizard tried to kill him.
Ignus: Quick. Get on the magic bug.
Greyfarn: It's not a magic bug, you dope. It's a magic arachnid. Can't you count the legs?
Greyfarn: Six, seven, eight. Not six, eight! I'll kill you, you imbecile!