Corrupted Elderwood cannot be found on the Corruption layer, despite the current tooltip (as of R26 in November 2015).
Corrupted Elderwood can only be "created" by corrupting blocks of Elderwood, by:
- throwing Corrupt Bombs at Elderwood (to craft these bombs you'll need Corrupted Stone, Corruption Dust and even some Lumite)
- touching Elderwood with either Corrupted Water, Corrupted Wood of any kind, Corrupted Dirt, Corrupted Grass, Corrupted Leaves of any kind and/or Corrupted Stone. You can build whole platforms from Elderwood with only one corrupted block in it, and in time the corruption will spread by itself over all the Elderwood blocks that are touching each other
At least that's how it currently is as of R27 in January 2016, see Corruption (spreading rules).
You can turn every other block of Wood of all kinds (not Logs though!) into Corrupted Wood by the same means. If you corrupt Ashenwood, it will turn into "Corrupted Ashenwood" (looking exactly like common Corrupted Wood though). All other kinds of Wood will currently turn into "ordinary" Corrupted Wood.
If you purify Corrupted Elderwood, it will become uncorrupted common Elderwood again. However all other Wood-blocks except for Ashenwood and Elderwood will turn into Cragwood if purified again, no matter if they had been Parchwood, Autumnwood, Shorewood, Weepwood or Wildwood before they were being corrupted.
Corrupted Elderwood (as all other kinds of Corrupted Wood) can only be picked up with a Diamond Mining Cell or a Lumite Mining Cell equipped, and both Power Cells will lose durability when used on corrupted blocks as usual.
Corrupted Elderwood can be used as a Fuel for Forges; 2 blocks will be needed for each process (of melting or hardening), it burns very fast and such is nearly the best fuel in Creativerse (right after Tar Bread). Also Corrupted Leaves (you'll need 4 blocks of those each though) make great Fuel of the same high quality.
When creating arenas from Corrupted Elderwood, all kinds of corrupted creatures can spawn there as soon/as long as it is dark (also Corrupted Leafies), and occasionally even rare Diamond Treasure Chests.
Corrupted Elderwood is flammable (as are Corrupted Leaves), but will not easily catch fire. You will either need a Fire Bomb or liquid Lava to set it on fire, and the fire will not spread easily nor far to other blocks of any Corrupted Wood (or Corrupted Leaves) blocks from where it initially started, not even in warm to hot biomes.
The fire can still spread "well" onto better flammable materials; like Tar (burns easiest), uncorrupted Wood, Leaves, Tallgrass and the like, also many building-blocks crafted from wood and/or leaves might catch fire easily, especially Shredded Leaves, and it will spread the fastest in a warm to hot environment.