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In a fantasy setting it is quite uncommon to use Sie. You would use du or the pluralis majestatis form Ihr

So the question would rather be, why is Gandalf saying

Du kannst nicht vorbei!

Instead of

Ihr könnt nicht vorbei!

You are right that animals would be addressed as du in German and furthermore, that the Balrog cannot be considered an animal. At least I would consider to say Ihr to a powerful evil spirit, to not anger it. However, diving into the depths of Tolkien's world, Gandalf and the Balrog go back to the same race (the primordial spirits Maia). As such, it could be argued that Gandalf is somehow familiar with it (and he knows that the Balrog is to be expected in the mines) and as such chose the du form. In that way he also implies he's on the same level, if not above it, and emphasizes this with his words. Another argument would be that the Balrog was already angered and that was not really time to use courtesies.

However, this could be deemed too much of an interpretation and the truth could simply be that the translator didn't care much on this particular translation.

To address the question about können:

The way it is emphasized in the movie, it does not mean

You are unable to pass.

But rather

You are not allowed to pass Du darfst nicht vorbei

Which agrees with You shall not pass.

In a fantasy setting it is quite uncommon to use Sie. You would use du or the pluralis majestatis form Ihr

So the question would rather be, why is Gandalf saying

Du kannst nicht vorbei!

instead of

Ihr könnt nicht vorbei!

You are right that animals would be addressed as du in German and, furthermore, that the Balrog cannot be considered an animal. At least I would consider saying Ihr to a powerful evil spirit, so as not to anger it. However, diving into the depths of Tolkien's world, Gandalf and the Balrog go back to the same race (the primordial spirits, Maia). As such, it could be argued that Gandalf is somehow familiar with it (and he knows that the Balrog is to be expected in the mines) and as such chose the du form. In that way he also implies he's on the same level, if not above it, and emphasizes this with his words. Another argument would be that the Balrog was already angered and that it was not really time to use courtesies.

However, this could be deemed too much of an interpretation and the truth could simply be that the translator didn't care much about this particular translation.

To address the question about können:

The way it is emphasized in the movie, it does not mean

You are unable to pass.

But rather

You are not allowed to pass Du darfst nicht vorbei

Which agrees with You shall not pass.

In a fantasy setting it is quite uncommon to use Sie. You would use du or the pluralis majestatis form Ihr

So the question would rather by, why is Gandalf saying

Du kannst nicht vorbei!

Instead of

Ihr könnt nicht vorbei!

You are right, that animals would be addressed by du in German and furthermore, that the Balrog can not be considered an animal. At least I would consider to say Ihr to a powerful evil spirit, to not anger it. However, diving into the depths of Tolkien's world, Gandalf and the Balrog go back to the same race (the primordial spirits Maia). As such, it could be argued that Gandalf is somehow familiar with it (and he knows that the Balrog is to be expected in the mines) and as such chose the du form. In that way he also implies, he's on the same level, if not above it, and emphasises this with his words. Another argument would be, that the Balrog was already angered and there was not really time not use for courtesies.

However, this could be deemed to much of an interpretation and the truth could simply be, that the translator didn't care much on this particular translation.

To address the question about können:

The way it is emphasized in the movie, it does not mean

You are unable to pass.

But rather

You are not allowed to pass Du darfst nicht vorbei

Which agrees with You shall not pass

In a fantasy setting it is quite uncommon to use Sie. You would use du or the pluralis majestatis form Ihr

So the question would rather be, why is Gandalf saying

Du kannst nicht vorbei!

Instead of

Ihr könnt nicht vorbei!

You are right that animals would be addressed as du in German and furthermore, that the Balrog cannot be considered an animal. At least I would consider to say Ihr to a powerful evil spirit, to not anger it. However, diving into the depths of Tolkien's world, Gandalf and the Balrog go back to the same race (the primordial spirits Maia). As such, it could be argued that Gandalf is somehow familiar with it (and he knows that the Balrog is to be expected in the mines) and as such chose the du form. In that way he also implies he's on the same level, if not above it, and emphasizes this with his words. Another argument would be that the Balrog was already angered and that was not really time to use courtesies.

However, this could be deemed too much of an interpretation and the truth could simply be that the translator didn't care much on this particular translation.

To address the question about können:

The way it is emphasized in the movie, it does not mean

You are unable to pass.

But rather

You are not allowed to pass Du darfst nicht vorbei

Which agrees with You shall not pass.

In a fantasy setting it is quite uncommon to use Sie. You would use du or the pluralis majestatis form Ihr

So the question would rather by, why is Gandalf saying

Du kannst nicht vorbei!

Instead of

Ihr könnt nicht vorbei!

You are right, that animals would be addressed by du in German and furthermore, that the Balrog can not be considered an animal. At least I would consider to say Ihr to a powerful evil spirit, to not anger it. However, diving into the depths of Tolkien's world, Gandalf and the Balrog go back to the same race (the primordial spirits Maia). As such, it could be argued that Gandalf is somehow familiar with it (and he knows that the Balrog is to be expected in the mines) and as such chose the du form. In that way he also implies, he's on the same level, if not above it, and emphasises this with his words. Another argument would be, that the Balrog was already angered and there was not really time not use for courtesies.

However, this could be deemed to much of an interpretation and the truth could simply be, that the translator didn't care much on this particular translation.

To address the question about können:

The way it is emphasized in the movie, it does not mean

You are unable to pass.

But rather

I won't allow you to pass Du darfst nicht vorbei

In a fantasy setting it is quite uncommon to use Sie. You would use du or the pluralis majestatis form Ihr

So the question would rather by, why is Gandalf saying

Du kannst nicht vorbei!

Instead of

Ihr könnt nicht vorbei!

You are right, that animals would be addressed by du in German and furthermore, that the Balrog can not be considered an animal. At least I would consider to say Ihr to a powerful evil spirit, to not anger it. However, diving into the depths of Tolkien's world, Gandalf and the Balrog go back to the same race (the primordial spirits Maia). As such, it could be argued that Gandalf is somehow familiar with it (and he knows that the Balrog is to be expected in the mines) and as such chose the du form. In that way he also implies, he's on the same level, if not above it, and emphasises this with his words. Another argument would be, that the Balrog was already angered and there was not really time not use for courtesies.

However, this could be deemed to much of an interpretation and the truth could simply be, that the translator didn't care much on this particular translation.

To address the question about können:

The way it is emphasized in the movie, it does not mean

You are unable to pass.

But rather

You are not allowed to pass Du darfst nicht vorbei

Which agrees with You shall not pass