Horse coming in locates rotten onion (8)
I believe the answer is:
eschalot
'onion' is the definition.
(eschalot is a kind of onion)
'horse coming in locates rotten' is the wordplay.
'horse' becomes 'h' ('H' can be a synonym of 'horse').
'coming in' means one lot of letters goes inside another.
'rotten' indicates an anagram.
'locates' is an anagram of 'escalot'.
'h' inserted within 'escalot' is 'ESCHALOT'.
I've seen this clue in The Independent.
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