Google gives me this:

http://forum.team17.co.uk/showthread.php?t=24226

But the buffalo of lies is a "new" weapon? What's going on here? It seems like someone has a story to tell...

I believe it was never actually accessible in W4, or at least not without manually tweaking the game.

It.Is.Not.A.Weapon

It.Is.A.Random.Crate.Event

It appears when you collect a Random Crate. The Buffalo has tiny wings, it flies upwards and then shrinks smaller and vanishes as the Random Event occurs.

The Buffalo is a part of Worms mythology. It was originally named by Andy Davidson years ago as the God of Dark Side worms (I think its first mention is in the manual for Worms: The Directors Cut). Andy said he had an idea of how the Buffalo would appear in a game some day, but it wouldn't be as a weapon.