Good Merlin developed in troublemaker (7)
I believe the answer is:
gremlin
'troublemaker' is the definition.
(I've seen this in another clue)
'good merlin developed in' is the wordplay.
'good' becomes 'g' (abbreviation).
'developed' indicates anagramming the letters.
'in' is an insertion indicator.
'merlin' anagrammed gives 'remlin'.
'g' placed inside 'remlin' is 'GREMLIN'.
(Other definitions for gremlin that I've seen before include "Cause of unexpected mechanical problem" , "Mechanical mischief-maker" , "Trouble-making imp" , "mischievous type" , "Troublemaking goblin" .)