While, I got an answer from the Assistant Park Ranger at the Mountain Bridge Wilderness Area in South Carolina. I think it is a good answer.
Apparently there are two different stories for how the Dismal Forest received its name. The first is that when loggers first entered the Dismal Forest, the rhododendron and mountain laurel were so thick (or so "dismal") they decided to turn around and log elsewhere. The second involves those visitors who came to visit Caesars Head in the late 1800's. Apparently, a few young woman were standing out where the overlook is today looking out over the Dismal Forest. As they enjoyed the view and fanned themselves from the summer heat, they contemplated how "dismal" it would be if one were to fall to their death from the overlook. At the thought of someone falling, they would continue to fan themselves, just shake their heads and say......"Dismal, dismal, dismal."
Again, the Dismal Forest in located in Northern Greenville County, South Carolina. It can be seen from the overlook at the headquaters of the Caesars Head State Park.