Here's why:
* Compound nouns are made up of two or more words that function as a single unit (e.g., "fireplace," "high school," "post office").
* South Dakota is a proper noun, specifically a geographical place name. It's a single entity, not a combination of separate words that act as one.
While "South" and "Dakota" are separate words, they are combined to form the name of the state. They don't function independently within the name like they would in a compound noun.