I acknowledge that this is not authoritative. I am taking this quote from Facebook from a post written by Rod Meldrum (Author of Book of Mormon Answers). I had heard this before but did not know the source. So these are the words of Rod Meldrum to be verified at a later time.
Even if the source turns out to be true, Brother Woodruff would not be the authority of where the Zarahemla temple would be. Nevertheless, he may have been correct. He may have learned this directly from Joseph Smith. So while this is very interesting, it should be taken as only that. It is interesting hearsay which may end up being correct.
Here is a quote from the autobiography of Edward Phillips. “I was standing by the temple talking to Brother Woodruff and he pointed out a spot to me on the opposit[e] side of the river about a mile and a half above Montrose, and said there would be a city and a temple built there and the place would be called Zarahemla. I was at Nauvoo when the temple was finished and dedicated. I went up into the tower and wrote my name there. As I understand, the wicked have burned that temple to the ground and it is all destroyed like the Jerusalem temple. But I expect to see that temple re-erected and the one built on the opposite side of the river to match.” Autobiography of Edward Phillips See also D&C 125.
Firm Foundation believes the City of Zarahemla in the Book of Mormon is likely near Montrose, IA and the Land of Zarahemla would be in the states of Iowa, Illinois, and Missouri. The Land Bountiful is likely Indiana, Ohio and upper Pennsylvania.
Rod Meldrum