I'm curious too -- I don't live in the area but live in NC and hike/camp the area often. It's not named in the NC Gazetteer.

In an interview with Alice Gerrard and Andy Cahan, Tommy Jarrell, of Toast, NC, related that Toe Nail Gap was "on the back side of the mountain," but which mountain wasn't clear. Later on, he stated he doubted there was "any sign of a path up there anymore (in 1983)." Apparently, Wyatt Washington "Tommy" Parrish lived over that way; the Parrishes seem to have lived near Galax/Independence, VA area (click).

Further confirmation down that path makes it seem that the area was in Carroll County, VA, possibly the western side, but other places mentioned in the clipping are similarly obscure. It does say it's west of Flour Gap [sic - Flower Gap? see map] (The Roanoke Times, January 2nd, 1955). Another article, describing the raid of a liquor still, mentioned Toenail Gap was "near the North Carolina-Virginia state line between Piper's Gap and Lowgap" (Winston-Salem Journal, July 1st, 1952). Later in 1973, there's an advertisement for the sale of a house "at top of Toenail Gap" -- no address (nor mention of how you could live at the *top* of a gap), but they mention it's near Fisher's Peak (The Sentinel, April 5th, 1973)

Based on all that, I'd guess it's somewhere near the Blue Ridge Music Center or that vicinity. Near the WBRF-FM antenna is another good candidate, imo, since it's so steep.