Okay guys. Iluvatar Allmighty has decided to help you educate Mint and others on the subject of LOTR.
Sonkem is correct in saying that Gandalf and the Balrog have the same roots. Sauron, Gandalf, Saruman and the Balrogs are all Maia and were created by Iluvatar. Sauron was a servant of Melkor and corrupted other Maia like himself who then became the Balrogs. The Valar who live on the other side of the Great Ocean later sent the five Istari or five Wizards to help Middle Earth fight against Sauron. Saruman and Gandalf are among these five Wizards. Sauron, Saruman, Gandalf and the Balrogs all have the same origin (they are all Maia) but vary in power and appearance. Maia can sometimes change their appearance, hence the Balrogs and Sauron are big and ugly and Saruman and Gandalf adopted a human appearance. To further point out the fact that Gandalf and the Balrog are equals, you can note that on the bridge in Khazad-dum, Gandalf spoke of being a wielder of the flame of Anor as if he had just the weapon neccessary to defeat his adversary.
What happened to Gandalf when he became white?
Like I said, Gandalf was sent to Middle Earth by the Valar with a mission: defeat Sauron. The Valar have a certain power over death (Mandos for those who have read the Silmarillion). When Gandalf died he was sent back to Middle Earth to complete his task and was placed at the top of the Order of Wizards replacing Saruman and hence becoming Gandalf the White. As for the clothes, it was Galadriel who gave him his white robes but I think that's just to show his rank.
Sorry for the super long post but I was trying to be clear and specific
Iluvatar Allmighty Ruler of Ea.