[Lalwendë]

Originally Posted by Juicy-Sweet

Obviously Gandalf has no idea whatsoever there's is a Balrog in Moria. If he knew it was there, he would have picked ANY other route than Moria. Better to walk through Isengard then

We ALSO know that all elves that heard the description of the balrog would know immediately what it was - Legolas reaction in LOTR - I assume as well that even a vague description would make them think it was probably a balrog.

These might be useful - I was reading the Moria chapter the other day to look up a rare example of using a 'spell' so it's fresh in the mind...

Legolas would know what a Balrog was from tales of the destruction of Gondolin, he wouldn't need to see one. But in any case, I think that some in Middle-earth knew there was something lurking in Moria, and may have even known what it was. Gimli, I think, knew exactly what Durin's Bane was:

Gimli stared with wide eyes. 'Durin's Bane!' he cried, and letting his axe fall he covered his face.

Aragorn sounds like he might know what lurks in there as he directs these words to Gandalf specifically:

It is not of the Ring, nor of us others that I am thinking now, but of you, Gandalf. And I say to you: if you pass the doors of Moria, beware!'

As for Gandalf, he knows something is in there but doesn't know what exactly it is. He just knows there are dark, Nidhoggr-esque things under the mountains. He maybe hopes the Watcher is it, especially after they read the book of Mazarbul.

'I do not know,' answered Gandalf; 'but the arms were all guided by one purpose. Something has crept, or has been driven out of dark waters under the mountains. There are older and fouler things than Orcs in the deep places of the world.' He did not speak aloud his thought that whatever it was that dwelt in the
lake, it had seized on Frodo first among all the Company.

And since the dwarves fled, no one dares to seek the shafts and treasuries down in the deep places: they are drowned in water--or in a shadow of fear.'

even as mithril was the foundation of their wealth, so also it was their destruction: they delved too greedily and too deep, and disturbed that from which they fled, Durin's Bane.

But the main one that shows Gandalf is not aware of a Balrog (and showing how stressed he is at this point as there cannot be very many threats in Middle-earth that would pose that particular type and level of threat, yet he is still befuddled):

'As I stood there I could hear orc-voices on the other side: at any moment I thought they would burst it open. I could not hear what was said; they seemed to be talking in their own hideous language. All I caught was ghash: that is "fire". Then something came into the chamber--I felt it through the door, and the orcs themselves were afraid and fell silent. It laid hold of the iron ring, and then it perceived me and my spell.
'What it was I cannot guess, but I have never felt such a challenge. The counter-spell was terrible. It nearly broke me. For an instant the door left my control and began to open! I had to speak a word of Command.