The song answers to both titles, but Unclouded is correct. Music Boulevard lists 14 entries for Unclouded and 16 for Uncloudy, some with sound samples, though I did not try any of them. Judging from Willie Nelson's recordings, you are probably correct in hearing the y.

This site has the words and a nice sound file. http://www.accessone.com/~rwadams/h/uncloudd.htm

This site has an interesting story of how it came to be written. I have included part of it here. http://www.umr.org/SFhym912.htm

Both words and music were written in the 1880s by Josiah K. Alwood, a circuit-riding preacher in the Midwest.

On a bright, moonlit night, he was riding home from a preaching appointment. As he rode along on horseback, thinking about the sermons that he had preached during the day, the melody and words began to form in his mind. Soon he was urging his horse along and singing at the top of his voice.

The next morning he wrote down the words and picked out the melody on the little Estey parlor reed organ in his home. Later a friend completed the tune, and it was published in Chicago about 1890.