This phrase has absolutely _no_ racial dimension, despite appearances. It is a Northern British (e.g. Yorkshire) term referring to a silly person. It does not derive from nigger and should not be considered racist at all.
Tha cawn't even spell thi own name -th'art a bluddy nig nog
Variation on "nigger", evoking stereotypical African tribal chanting, dancing etc. Although very offensive today, many people wouldn't have regarded it as such in the past when it could also just mean "idiot".
"Straight outta the banana tree,eh? Well, let me tell ya this, nignog, you go stealing white man's motorcars, you give white man stick. Right?" - Film: Scum, 1977
Two part chocolate egg-nog, four parts Hennessey, with a watermelon wedge. Seasonal drink enjoyed by african-american. Possible side effects include: instant gold teeth, no job, corn rows, and swelling of the lips.
I za gonna be get crunked up on dat Nig Nog dis yer bitchs.