Half a century ago, people started moving east into the forest. They ignored the warnings that it was haunted, that people who went there in early centuries came back mangled and changed. But of no one has been there in living memory, there is no proof to dissuade outsiders, and so these people settled there, cutting back the trees, clearing land to build on.
But then, just as foreseen, they started to change. Some returned to their cities with hideous scars and mutated limbs. They carried the old warnings with them, and were predictably shunned by decent folk. But many never came back at all. Some were seen living in the woods, like savages, or animals. Some even began to look more like animals than humans. Their houses were left abandoned, and the forest grew over them once more.
Scouts and nearby villagers say there are still people in those haunted woods, even today. Or something not quite human anymore, but monstrous and beast-like. Mutants, perhaps. They cannot be the original settlers, who were lost decades ago. But they could be their children, if their twisted, degenerated bodies were able to have any.