As Anne Neilson indicates, some texts place the action in Scotland. One more is that printed in John Harrington Cox's "Folk Songs of the South" (coll. in Va. in 1916), which begins,

"In Scotland I was bred and born."

Cox follows this up with "In London was my dwelling."

Such opening lines might easily have led Pepys casually to describe the song he heard as "Scotch." They would certainly fit well with a song sung on the London stage. But of course we don't know whether such lines are 250-year-old survivals or later developments. Since only two lines are involved, either is possible.

"Scotland" might easily have become "Scarlet Town"; but unfortunately the reverse might be the case as well.