His real name is Peter. Cute story from Dougal in the book Full Moon. When Butler first started working with Keith, Pete Townshend told him he'd have to get a nickname because two Petes would be confusing. Butler asked Townshend why Townshend couldn't be the one with a nickname. Townshend glared at Butler and said "I don't have a nickname, that's why!" Butler stated "That wasn't entirely true. Townshend had several nicknames. The least offensive being "Big Nose".
IIRC, Keith's daughter Mandy gave Butler the nickname Dougal because Butler had shaggy hair like a popular cartoon character with the same name.