I heard a story where Sai Baba lost his horse near Dhupkhede. Is that how he met Chandbhai?

Your understanding of the event is slightly different from what is described in the book's introduction. Chapter 0 clarifies that it was not Sai Baba's horse that was lost, but rather the horse belonging to Chandbhai, the Patil of Dhupkhede. Chandbhai was searching in the forest for his lost horse when he encountered the saint, whom he had never met. The future Sai Baba then told Chandbhai that his horse was behind a nearby hedge. When Chandbhai found the horse exactly where predicted, he was impressed and insisted the saint visit his home, setting in motion the events that led to Sai Baba coming to Shirdi.