Question: Am I mistaken or does Malfoy mean Bad Dragon?
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Answer: According to Language Realm - Malfoy can be taken as "mal" and "foi" or translated to "bad faith or evil belief". Draco, of course, is akin to the Greek "drakon" for dragon. So where Draco refers to a dragon, the name Malfoy itself, does not mean Bad Dragon - but Bad Faith (which in itself makes sense in the Rowling realm).
Zwn Annwn