Final answer:
The passage provided does not contain sufficient information to determine where Darrow saw 'Mustang' before; thus, an accurate answer cannot be given without additional context from the specific source material.
Step-by-step explanation:
The context of the question seems to be related to a work of fiction, possibly a novel or a story, where the character Darrow encountered 'Mustang'. However, the provided text does not include enough information to accurately answer the question about where Darrow saw 'The Mustang' before. The options given (at the Institute, on Mars, in his dreams, in a battle) suggest it might be related to a specific storyline, such as the 'Red Rising' series by Pierce Brown where Darrow is a main character. To provide a correct answer, one would need to refer to the specific book or material in question. The passage provided, focused on a boy with a wooden sword, does not contain the information necessary to answer the question accurately and without speculation.