Lost Lion Tail's legend was pretty absurd also. It was about a woman disguising herself as a young boy named Little John or something like that. And she hunted with a bunch of men who did not even know she was a woman.

Speaking of bad Purple Parrots legends, the Golden Pepperoni one needs to be on that list too. The artifact was already questionable, but then we had the nightmares about pepperoni and the Great Linguini in the legend. -_-
Season 3 had the silliest legends of them all. Red Sash had the "I'm grounded for two weeks with no TV line?!". Yeah, I am sure kids would believe that they would have televisions in the Tokugawa Era.

The Mummified Hand legend sound it came from AYAOTD episode too.