I suggest to you that the term pseudo-history is appropriate in those cases in which those who forward a narrative are willfully lying in order to promote an agenda, usually a political agenda. I provided the remarks about the so-called "King Arthur" because there is absolutely no evidence which is contemporary to the period in which such an individual would have flourished. Those who make claims about a putative "King Arthur," however, cannot be said to forward an agenda--they have nothing to gain, except, of course, for selling their silly books. There are many examples of historical myths which are outright lies, which can easily be demonstrated to be outright lies, which have nonetheless been promoted vigorously. The "Lost Cause" myth about the American civil war is an excellent example. That myth claims that the war was not about slavery, and that the American south was the victim of the American north. It is called "The War of Northern Aggression." The hotheads in the south started that war, however, but the promulgators of the myth have succeeded in convincing a lot of people that they were innocent victims. The myth has a concomitant claim that southern military leaders were superior to those of the United States Army. There are many other silly claims--and all of these claims can easily be disproved.
A more insidious example can be found in Germany after the Great War. There is the Stab in the Back myth--this holds that the Germans were not defeated in the field, but that politicians pulled the carpet out from under their army by asking the Allies for an armistice. There is, in fact, documentary evidence that Ludendorff contemplated as early as September 29, 1918, requesting an armistice. German "intelligence" was never very good, in that war or the subsequent war. But by late September, 1918, they had verified that 200,000 to 250,000 American troops were arriving in France every month. Ludendorff understood that the German army would soon be overwhelmed by such numbers. This was an important distortion because it lead Germans to believe that they had a superior military establishment which had been robbed of its opportunity. Not only was that not true then, it was not true in the Second World War. A direct link can be made between that myth, and the unrealistic confidence which Hitler was able to instill in German military superiority. Hitler exploited many other distortions, although not of such pseudo-history.
I think it would help you to make a distinction between pseudo-history, willful lying about history, and simple, wishful stories such as the "King Arthur" myth.