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The Michigan Dogman's origins are from an old April Fools Joke. You can find the song that started the legend on YouTube. There is also a website dedicated to collecting the sightings of the Dogman, although there is now a disclaimer saying everything on the site is for entertainment purposes only. I guess that's the way the creator of the song and legend is going to cover himself after the Gable Film hoax got out of hand.
For those that don't know, the Gable Film was supposedly old footage of a Dogman attack from the late 70's. It gained internet fame, was speculated about and spread around. When the History channel wanted to do a more in depth look at the film and feature it on a second Werewolf episode of MonsterQuest, the guy who made the song and the guy who made the video had to fess up and say it was a hoax. A lot of people were angry that he would go along with a hoax, and many comments he has made on his Dogman blog about the film have disappeared. He did not make the hoax film, it was brought to him by the guy that made it, and they both kept quiet about what it really was, until they were faced with experts who wanted to analyze the footage.
As for the Dogman itself, many parts of the legend are supposed to be pulled from Native American stories of men that could change into wolf/dog creatures. More than likely, stories like that spawned from seeing men dressed in wolf or coyote skins seen in either dense forests, low light or both.
A brief glimpse is all it takes to spur the imagination into spinning wild yarns. Someone who has never seen a bear in real life might mistake one standing up in the distance for Bigfoot. An unfamiliar fish breaking the surface of murky waters could turn into a lake monster. There are documented stories of encounters with sea monsters, mermaids, strange forest creatures, fairies, gnomes, elves, and other unbelievable creatures, but stories, clever photos and polygraph tests still don't prove they exist.
If you never knew what a platypus was, and I were to describe one to you, you would think I was crazy to believe in such a beast.