The chimer were definitely in the area way before the jungle - in fact, the jungle is EXTREMELY young in bottanical terms.
Originally, what is now the argon jungle was an extremely fertile farm plain, densely populated by Dres farmers and once containing a vast and nearly suburban network of locations - places of worship, houses, mansions, slave pens, garrisons, and before they were extinct, a harmoniously intermingled small Dwemer population. What happened was that, as the khanathen flu spread in the middle of the first era, it drove Dunmer out of the area - with the once uniform-farmland gone, the flora from argonia spread into the rich soil ridiculously fast... and the irrigation systems actually now turned against the terrain, saturating it heavily with water and causing nearly all the old structures to sink. the only remaining structures were either so large that they only partially sunk, or were built into rockier terrain and thus escaped the softening of the soil. This sudden change in terrain also affected the climate, the hot eastern sun and copious amounts of water saturation combining to create an almost perpetually foggy subclimate encased by the surrounding cliffs and mountains. However, the ashy soil of morrowind began to seep into the argonain swamps to the south, killing nearly all of the once mighty trees - the only surviving tree species were hybrids between morrowind and argonian flora that could survive the new climate. The argonian swamps to the immediate south, and deeper ponds that temporarily supported their flora, are filled with dead trees for this reason. Another factor of the unique flora hybridization seen in the jungle is that the region's mountains contained vast reserves of silver, which the dwemer minority mined away at heartily (Dunmer didn't care much for the stuff). the high soil saturation brought large amounts of finely eroded silver "dust" into the soil, which was immensely hostile to morrwind flora yet highly benificial to the argonian species. So large is the quantity of silver that, in some places, the once-bone-dry silver ore (Silver Chloride) would chemically react with the water, creatng hydrochloric acid and slver oxide (an insoluble nonreactant substance used in batteries) in much of the stagnant ponds, preventing any new life from sprouting up. The high amounts of acid are constantly eroding at the soil itself, producing a horrible-smelling vapour that always issues from the ponds.
In short, the muck ponds are essentially pools of acid, blanketed with clouds of dense noxious gas; and the trees in the jungle itself are a unique newly-evolved hybrid flora species able to handle the strange environment. There are ruins of the once thriving society of the region, but only structures that existed at the edges of the area still stand - the rest were literally swallowed by the ground and the newly accquired two feet or so of decayed plant matter from the now-extinct native flora and abandoned crops.
EDIT: wow, now if only I couldve wrote something that detailed for my biology exam last year...
