Here's two stories about the creation of Alfred E. Neuman.
I doubt there will ever be an exact and legitimate story on how Alfred E. Neuman actully came into being. The original publishers of Mad can't even agree on who actually came up with the magazine title.

"Long a beloved character and mascot of MAD magazine, Alfred E. Neuman is the original "What? Me Worry!" kid.
According the the MAD website:
"No one's exactly sure where Alfred came from, although illustrations of a grinning gap-toothed boy similar to Alfred have been traced back to at least the 1800s. Other Alfred-like images kicked around for years in various ads, postcards and even other magazines, before first appearing in early issues of MAD.

At first, Alfred was a character with several different names (including Mel Haney, Melvin Coznowski and the What - Me Worry? kid) who simply appeared in the background of different articles, but in issue #29 (September, 1956) he was stuck with the name Alfred E. Neuman and one issue later, Alfred made his first full-color appearance on the cover in a portrait drawn by Norman Mingo."


..and the following found elsewhere:

Alfred wasn't originally called Alfred. He was first a nameless goofy looking, gap-toothed boy in a 50's ad for a dentist in Texas! Some demented MAD reader in Texas saw the ad and, for some strange reason, decided that they should send it to MAD and then, for some even stranger reason, MAD liked the boy and used him in articles. Eventually, he took over the whole cover and became even more MAD than Dave Berg, Al Jaffee, and Bill Gaines himself! But, without a name, he was even more pointless than MAD. So they decided to have the readers name him. Many a name was attempted, and Alfred E. Nueman was the one that stuck and THAT is the true story of how the very symbol of MAD came about.