There are four Forest Service campgrounds off (or close by) to Hwy 120. They are
The Pines,
Lost Claim,
Sweetwater, and off of Evergreen Road,
Dimond O.
Dimond O is the closest to Yosemite, and hence the most expensive (at $21/night). The Pines and Lost Claim are the furthest away from Yosemite (though they're still relatively close-by) and cost only $16/night.
There's probably legal dispersed camping available along the Hwy 120 corridor, but I don't know the exact locations where it might be permitted. Hence, my recommendation to call the Groveland Ranger District office for more up-to-date information. My guess would be if dispersed camping was permitted, it would be along Old Hwy 120, Hardin Flat Road, and on Forest Service Roads 1S69 and 2S30 (and possibly Evergreen Road).
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