Well, going through the Mines was a last resort. They tried going through the mountain pass of Caradhas (sp?) but were blocked by the snow storm.
Going south around the Misty Mountains through the Gap of Rohan would take too long and furthermore, would bring them too close to Isengard, and hence Saruman.
So all in the decision to go through the Mines of Moria was the best of a series of bad decisions.
As to why the password was elvish - because the gate was made by elves?
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