"Unvanquished" means not conquered or defeated; the whole novel is about the defeated Southerners during and after the Civil War. So what's Faulkner up to, calling it The Unvanquished?
Well, even though they were defeated militarily, their Southern spirit wasn't crushed. Their homes were burned down and their slaves and mules and silver taken away from them, but they continued to behave in keeping with the patterns and values of their way of life, which to them is still the right one. They may not be the vanquishers, but at least they ain't vanquished either.