Story of Grishneshwar Temple

Once the king went hunting. While hunting, the king killed the animals living with the Rishis and munis too. Seeing this, the irate Saints cursed the king, as a result of which, his entire body was infested with insects.
Now, smitten by this curse, the king began to wander in the forest. His throat was parched because he was very thirsty. There was, alas, no water to be found anywhere. At last he found a water hole made by the hooves of a horse. Just as the king started to drink water a miracle occurred. The king's body was rid of all the insects. The king did severe penance (Tapa) there. Lord Brahma was pleased and appeared before him and installed Parashta Teerth there. He also created a huge and holy lake near by.

This Brahma sarovar later came to be known as Shivalay.

There is a story about Shivalay also:

Once Shiva and Parvati were playing chess on Mount Kailasa. Paravti checkmated Shiva. Shankara played to be angry at this and went away southward. He went and stayed at a place on the Sahyadri range, where there is cool breeze. This place was given the name of Maheshamauli Bhainsmal. Parvati came there looking for Shankar. She won the heart of Shiva in the form of a hill mountain tribal girl. They both spent some time there happily.

This forest came to be known as Kamyakavana. Lord Mahesha forbade crows from entering the area of Maheshamouli or Bhainsmal. One day, Paravti was very thirsty. Shankara pierced earth with his trident and got the water of Bhogavati from the Patal (Nether world). This is the Shivalay.

The Shivalay expands a little ahead where Shivanadi (Shivanand) meets it and a little more further, Yelaganga also flows just near it. When Shiva and Parvati were staying here pleasently, a hunter by the name Sudhanwa came there looking for a prey. A miracle happened and Sudhanwa turned into a woman. At this he did a severe Tapa there. Shankara was pleased and appeared. Actually, Sudhanwa was a woman by birth in his previous life. Thus, Shankara from that very curse of becoming a woman turned Sudhanwa into Yelaganga river. Thus, Punya Sarita Yelaganga was born in the Kamyawana. Later, it was to become the bathing place called Dhara Teerth or ‘Sita's Snangriha' and flow from a higher place and goes through Verul village.

Once Parvati, was about to fill her hair parting with vermillion and saffron, in Kamyavana. She kept them in her left palm and mixed the water of Shivalay in it. With the right thumb she started mixing them both. Then a miracle occurred, vermillion turned into a ShivaLinga and a great light appeared in it. Parvati was awe struck at this. Then Lord Shankara said: "This Linga was hidden in the Patala." And removed it with his trident.

Then a bubble emerged from the earth with water (Kashikhand).

Parvati kept that glorious light in stone Linga and installed it there. This Purna (complete) JyotirLinga is called Kunkumeshwar. But since Dakshayani created this Linga with the function of her thumb. She gave it the name of Grishneshwara (Grishna means friction).

On the southern mountain called Deva Parvata, a great scholar Brahmin Sudhama of Bharadwaja gotra, used to live with his beautiful, devout wife called Sudeha. They had no children. They were very unhappy because of this. They were harassed and tortured by the sly remarks of their neighbours. But Sudhama, an intelligent person, did not care about these. One day, Sudeha threatened to commit suicide and sister Dushma, married her husband. Both of them promised that there would be no jealousy between them.

After sometime, Dushma gave birth to a son. And eventually even that son married. Both Sudhama and Dushma, were nice to Sudeha. But jealousy did get the better of Sudeha. Once she picked up Dushma's son who was sleeping by her side and killed him. She threw the body into the lake near by.

In the morning there was a big hue and cry. Dushma's grief knew no bounds. Even then, she went to the river to do her routine worship. She made her usual hundred Lingas and began worship she saw her son standing near the lake. Shiva was pleased with her worship and revealed the truth about Sudhas forgiveness of Sudha's sin. She indeed requested Shiva to remain there itself for the welfare of the humanity.

Shiva acceded to her request and remained there with the name of Dhushamesha.