From _PC Magazine_, May 26, 1987, p. 91: 

Origins of the Word "Nerd"

John C. Dvorak

My quest began years ago.  My goal: to find the origin of the word
"nerd."  Don't ask me why I was so fascinated with this thankless
chore.  I simply had to know.

Surely this popular word wasn't derived from "nerts," as some
dictionaries suggest.  And it couldn't be a condensed version of the
archaic phrase "ne'er-do-welll," as some lexicologists surmised.

To find the origin, I asked my readers.  One (and only one) discovered
it.  But first, here are some of the other reports I received.

Like many others, Jack McCarty of Washington, D.C., believed it was
somehow derived from Mortimer Snerd.  Snerd was a famous dummy used by
ventriloquist Edgar Bergen from the late 1930s until around 1970.
This same theory was forwarded by Ricardo Alfaro of San Jose,
California, who also remembers Jerry Lewis being called a nerd in one
of his early movies.

ENGINEERS AND SURFERS  
Creative origins turned into folklore are popular with everyone,
including professors who enjoy, and seemingly believe, a ludicrous
tale of the word "knurd."  This seems especially true at MIT in past
years.  Gordon Schnaper of DuPont heard this version at Rennselaer
Polytechnic Institute: "The word was originally spelled `knurd,' which
is `drunk' spelled backward.  It meant a guy who studied all the time,
got all A's, and never took part in parties or activities.  He was
always sober, hence the inverse of drunk."  Nice try.  This story was
very popular on campuses in the early 1970s.

Meanwhile, I can't tell you how many librarians sent me the same page
from the _Second Barnhart Dictionary of New English_.  In it the
editors say: "1965.  Originally hot rod and surfing slang, probably an
alteration of earlier slang (1940s) `nert' meaning supid or crazy
person, itself an alteration of `nut.'  Also spelled `nurd.'"

The "nurd" spelling is used by those who think the word is obviously
derived from combining the vulgar term "turd" with "nut" to get
"nurd."

The idea that the word had to change to avoid liability is found in a
memo from Gary Schwartz of Berkeley, California, who believed that, on
its way to becoming "nerd," the word "nuts" had to become "nerts"
because it was considered "a bit risque to use the word `nuts' on the
airwaves in the 1930s."

Acronyms are popular explanations for the origin of the word.  Arthur 
Satarain, of Louisiana, claims the word was originally "gnerd" and was
an acronym for "gross, nervous, evasive, repulsive and disgusting."
Craig Patchett of Greenwich, Connecticut, figured it was an acronym
for "Neurotic Engineers in R&D."

You get the idea.

ZOOLOGICAL ORIGINS
The problem with all these explanations of the origin of the word is
that they are stupid and/or only go back to 1960 when the word
seemingly appeared out of nowhere.  Enter Ed Clark of Boulder,
Colorado.  He remembered his childhoood days and came up with what
seems to be the true and logical origin of the word "nerd."  It was a
creation of Dr. Seuss in his 1950 book _If I Ran the Zoo_ (Random
House).  It's spelled properly and the character drawn is ... what can
I say --- a nerd!  Theodor S. Geisel (aka Dr. Seuss), 83, told me that
he never heard the word before he drew the character.  In fact, he'd
forgotten all about his little nerd character.  "Perhaps it comes from
`Nerdfogel,' which I'm sure you know all about," says Geisel without
explanation.

I figure the monosyllabic word "nerd" crept into the subconscious of
the preliterate postwar baby boomers sometime in the 1960s.

Now to find the origin of the word "twerp."