A shady muffin is someone you can find in the dodgey end of town. Some one who wears his hat at a bit of a cheeky angle. You generally find them in dark corners, alleys, etc. and want to avoid contact at ALL cost.
"Have you been down to Bristol St?"
"Yes, but not the dodgey end. There's a bit of a shady muffin who loafs around the sudway."