The rainbow worm can be found in the Moltara City under the door that take you to the Caves. You will have to refresh until it appears.
Just keep trying, every 10 minutes or so. It's rare!
It's at the door leading to another part of Moltara.
It is right were the steps are to go to the caves. Keep refreshing and then you will find it.
It's random when refreshing the page. A real pain.