Here is what Niles says about "The Lass from the Low Country" in his liner note to the Folkways album 'John Jacob Niles Sings Folk Songs', a 1964 reissue of Asch 78s:

'In the early summer of 1933 an old man named Hugh Stallcup, who lived near Murphy, N.C. sang me a garbled little love-song he called "The Ash from the Hill Country". Two lines of this sad love ditty formed the basis for the poem of the "Lass from the Low Country". They were:

A lass who lived at the bottom of the valley,
At the bottom where the low waters ran, ...etc...

Soon thereafter, I wrote a tune I could sing to dulcimer accompaniment. Contrary to popular belief, I wrote the text and tune of this love-song.'

See pdf of liner note at http://media.smithsonianfolkways.org/liner_notes/folkways/FW02373.pdf. Niles placed the song in Cherokee County, N.C. and noted '(Copyright, G. Schirmer, Inc.)', as for all other songs on the compilation.