The word evidently comes from the Gaelic "cailpeach", = bullock or colt. It's a malevolent water spirit who lures humans to drown, but can be coerced (probably by trickery) into performing difficult labour. It's usually like a black or white horse [sometimes finely caparisoned], but now & again like a grey wrinkled old man. There's a wee rhyme about it: "The old family of the Grahams of Morphie was in former times very powerful, but at length they sunk in fortune, and finally the original male line became extinct. Among the old women of the Mearns, their decay is attributed to a supernatural cause. When one of the lairds, say they, built the old castle, he secured the assistance of the water-kelpy or river-horse, by the accredited means of throwing a pair of branks over his head. He then compelled the robust spirit to carry prodigious loads of stones for the building, and did not relieve him till the whole was finished. The poor kelpy was glad of his deliverance, but at the same time felt himself so galled with the hard labour, that on being permitted to escape from the branks, and just before he disappeared in the water, he turned about, and expressed, in the following words, at once his own grievances and the destiny of his taskmaster's family:
'Sair back and sair banes,
Drivin' the laird o' Morphie's stanes!
The laird o' Morphie'll never thrive
As lang's the kelpy is alive!'"
[- Chambers' Popular Rhymes].