In the fight against the immortal demon, Kagura tried to fully release Byakuei as she thought she was going to die. While she didn't, Byakuei's seal had been weakened, and he started going out of control. Kagura initially wanted to kill him with the power of the Kyuubi, but has rejected that notion, as he is the only family she has.
In actuality, Byakuei is a wolf-like beast in his uncursed form, and unlike his dragon and twin-head dragon forms, he has only one set of eyes, instead of two sets on each head.
After the incident with the Kyuubi and to the due loss of spirit energy he became a puppy version of himself. He gains a wolf like form while fighting Kirin but soon shrinks once it disappears. He carries a sword in his tail and Mikado believes his puppy form may be temporary. He can now transform at will.
Byakuei has the ability to absorb and convert another spiritual body into his own, an ability he demonstrated in the Garden of Tamamo against Setsuna and during the end of the Kyuubi arc, where he "ate" the Kyuubi's form. The full extent of this ability is shown in chapter 52, where he merged with the Tengu, which was released due to the weakening of his seal, and took over the latter's body and powers.