Here's what happened more or less.

One day, Spenser was reading Chaucer, and found a passage in which Troilus is described as being second to no one in "derring do that longeth to a knight." In other words "in daring to do that which belongs to a knight." Spencer thought he had discovered a new figure of speech, "derring-do." He assumed it meant something along the lines of "desperate courage," I don't know why, and, without having done any research on the validity of the term, started using it in his books.

It was later picked up by Sir Walter Scott, and he used the phrase in Ivanhoe. And now it's in your dictionary.

Forgive me if this information is a bit off - no one quite agrees on the specifics of who fucked it up first. There's a guy named Lydgate who figures in there somewhere, too.

I found bits of this information all over the web, but the best source by far was: