I've got a few different questions here, but they are all related.

1) Is Ayleid language in general separate from the Aldmeri language? When the Song of Pelinal talks about his name, it claims that the name is in the "Elvish" language, but doesn't say if it means that all Elves have the same language at this point or not.

2) Does anyone know how Ayleids choose their names? I don't dare to just throw syllables together to make something strange-sounding this time around, because I know I'll get called on it if I don't do this research first.

3) Where can I find more thorough reading on the Ayleid language? I looked at UESP's language page, and found the commonly-used words list. That doesn't help me much with names because only a fraction of those words are Ayleid(oon?).

My fanfiction needs your help!

Wheresoever the language pages at the Library and UESP fail you, a Sindarin-English dictionary should do in a pinch.

About your first question: From what we know about Falmer language, we can assume that the Ayleid language was very similar, for they share many of the same words. On th UESP there is an attempt at translating http://www.uesp.net/wiki/Lore:Falmer_Alphabet at Calcelmo's tower using knowledge of Ayleid language. Also, many Ayleid words are also used in Dunmeri toponyms. I think that if all the elves didn't have the same language, it was at least simlar enough for men to identify them all as just "elvish". Dwemeri is of course the exception.

There is a similarity between Ayleid and Aldmeri/Altmeri, judging from NPC names and Ayleid ruins names, but also a distinct difference.

The Ayleid language features harsher-sounding consonants. Lots of "c"s, "r"s and "g"s.

Altmeri in comparison is somewhat softer, playing with the tongue more than the throat. Alinor, Elenwen, Ondolemar, etc.

As for the naming convention, depends on what you're naming. For characters, no last name, probably. Title or two.