Some questions ..

[lathspell]

1. It is not known what happens when a Maia will 'die' physically. In Middle-earth it seems that, when you were corrupted by heart and therefore unloyal to the Valar (Sauron, Saruman), you were given no new body and a Sea-Wind from the West would take away their spirits. However those that did remain faithful (Gandalf) were given a new body after deciding if he is still loyal to the Valar.

2. I think that for herself she decided it a very long time before the beginning of LotR, when she meets Aragorn in Lothlorien. But Elrond then would given his authorization only if Aragorn held both the Sceptre and the Crown. From LotR - Many Partings - I quote this:

None saw her last meeting with Elrond her father, for they went up into the hills and there spoke long together, and bitter was their parting that should endure beyond the ends of the world.

I've always believed that, during that conversation, she made her final decision and became mortal.