It has been reported to drop from the following mobs:
Feral Scar Yeti
Longtooth Runner
Groddoc Ape
Gordunni Brutes and Warlocks
Hatecrest Warriors and Serpent Guards
Ironfur Bears
Sea Elementals
Land Walkers and Cliff Giants.
The aggregated drop rate is given as about 0.5%. As this does not account for the fact that while you have this item - or after you complete the associated quest- it will not drop for you again, the drop rate should be considered somewhat higher.
The best method known to date is simply to kill creatures in the zone and wait for it to drop.
Patch changes
Patch 1.8.4 (05-Dec-2005): All OOX Distress Beacons are now multi-drop; everyone in a group should be able to receive one if it drops.