The origin of "Villa Miseria" as literally "Miseryville" is 100% the correct explanation.
If I'm not mistaken, most -if not all- of the neighbourhoods in Bs As with a "Villa" in their name, such as Villa Crespo, Villa Urquiza and so on, started their life as towns outside of the (then smaller) city, before the growing metropolis engulfed them, and it was only later that they became neighborhoods within it. So they were villa = town.
Much in the same way areas inside London with the word "town" in their name, like Camden Town or Kentish Town, were really towns in the countryside outside of London before London grew and engulfed those.
Villa (in Spanish and Italian) and Village (in English) have obviously the same (Latin) root; villa does mean indeed village, town, it can also mean manor house, country mansion, etc.
Other places with Villa in their name like Villa General Belgrano, Villa Gessell etc are towns. Greenwich Village in NYC springs to mind as a similar way of using the word in the context of a neighbourhood
