Most likely from Old English ar-cæt, meaning 'forest's edge'. As for pronunciation, in Old English, 'c' can be pronounced as 'k' (e.g. cyning = king) or 'ch' (cild = child). In this case, 'c' followed by 'æ', it would have been pronounced as 'ch'.
And yes, in that case 'Chetwood' is...