It may have been a legend of some kind when Plato was in his youth, but all we can be sure of is, his is literally the only source of it. Flood stories are found in most cultures, including those with no known connection with the ocean, and the Atlantis story is, at heart, a flood story.
http://www.freerepublic.com/focus/chat/2170733/posts?page=28#28
Flood stories are nearly universal and there are a lot of geologic anomalies that cause me to scratch my noggin. I wish the ancients had kept better records on nonperishable media.