What exactly is dwarven metal? Unlike other materials you can't find dwarven veins, the only way to make dwarven bars is to smelt pieces of dwarven made stuff. How is it that the dwarves made almost everything out of this material, yet it can't be found in natural form?

Maybe souls-turned-metal.

http://www.uesp.net/wiki/Lore:Ahzidal%27s_Descent

There's also a theory that it was made from people. But I thinks it's probably just properly harmonized Moonstone or some other metal. Which still explains why no one knows how to make it any more.

It's an alloy, plain and simple, and the harmonizing parts indicate that they used tones to that, no doubt shaping the structure of it and what not.

I would guess out of the 7 metals, they would at least have iron for strength and ebony for its mythic qualities, but as for the rest. Who knows? They may even be undiscovered metals for all we know.

Crazy idea: Maybe the 7 metals refers to 7 notes, and metals that play notes altogether similar to a scale are harmonized to make the alloy.