Why is the movie called "Dirty Dancing"?

Because it's not white, formal dancing. Especially in 1950s/1960s upper class culture. That type of dancing is structured, stiff. The dancers have space between them, very proper like. "Dirty Dancing" on the other hand, leaves no space for Jesus. It's basically the 1960s version of having sex on the dance floor.

First, the movie was based on the writer's personal life:

Dirty Dancing is based in large part on screenwriter Eleanor Bergstein's own childhood: she is the younger daughter of a Jewish doctor from New York, spent summers with her family in the Catskills, participated in "Dirty Dancing" competitions, and was herself nicknamed "Baby" as a girl. In 1980, Bergstein wrote a screenplay for the Michael Douglas film, It's My Turn. However, the producers cut an erotic dancing scene from the script, much to her dismay. She then conceived a new story, focused almost exclusively on dancing. In 1984, she pitched the idea to MGM executive Eileen Miselle, who liked it and teamed Bergstein with producer Linda Gottlieb. They set the film in 1963, with the character of Baby based on Bergstein's own life.

Second, her personal life involved Mambo, not Salsa, though most of film is a mix of both and others.

The "Dirty Dancing" takes place in the partying that the resort staff take part in after their work days end.

Public dancing at the time the movie was set (1963) was a more sedate affair and the gyrations and sexy moves involved in the parties would have "shocked" the suburban parents of the time.

Hence, this type of dancing would have been considered sinful, or dirty.

Wikipedia

The staff hold secret after-hours parties in their quarters, and Baby is surprised by the "dirty dancing" they engage in. Intrigued, Baby receives a brief, impromptu dance lesson from Johnny.