Fabled hill that is found in South Dakota (7)

I believe the answer is:

storied

'fabled' is the definition.
(I've seen this before)

'hill that is found in south dakota' is the wordplay.
'hill' becomes 'tor' (tor is a kind of hill).
'that is' becomes 'ie' (short for Latin 'id est', 'that is').
'found in' indicates putting letters inside.
'south dakota' becomes 'sd' (abbreviation).
'tor'+'ie'='torie'
'torie' placed inside 'sd' is 'STORIED'.

(Another definition for storied that I've seen is " Fabled".)

I've seen this clue in The Times.

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