Re: i know how DNA was first created but how did the cell first occur?

I am puzzled as to how the material around the DNA knew the code in which the DNA is "written". I know roughly how the DNA first occured (by passing an electric current through some sort of mineral pool and the chemicals need some how come together) but my question is to how the material around the DNA strands knew the language and how to respond to it.

The present theory is that it wasn't DNA that first occured. The "RNA World" model suggests that life originated from a complex pool of RNA molecules that served both as genetic material and catalysts for their replication and metabolism. The "Proteinoid" model suggests that pools of randomly assembled polypeptides (proteinoids) generated a complex metabolism while self-assembling into "microspheres" (similar to micron-sized cells). The fusion of these models gives a scenario of a prebiotic biochemical world, in which interactions between ribozymes (catalytic RNA's) and proteinoids may have laid the foundations for the genetic code by usurping the RNA replication machinery (rRNA's) to generate proteinoids with amino acid sequences based on the replicating ribozyme sequences. This suggests that the first "cells" were probably proteinoid microspheres containing fragmented RNA genomes with both enzymes and ribozymes to carry out metabolic and replicative functions (a model reminiscent of some viruses). It wasn't until later that DNA began to replace RNA as the genetic storage medium, although even today RNA is responsible for converting the DNA information into proteins. For more on this, try the following previous posts:

My answer on the RNA World
Jim Kranz' answer on the RNA World
Dean Jacobson's answer on the RNA World
RNA World chart from NYTimes
Self-assembly of proteinoid microspheres
Last Universal Common Ancestor

Because within the DNA is the commands for the surrounding tissue, for example if it is a specialised cell like a nerve cell the command is to create a nerve cell but how would the material at the beginning know how to do this.

All life evolved from single-celled organisms. So "at the beginning", there was no "surrounding tissue", just as there were no "specialised cells". That is not to say that the earliest single-celled creatures didn't interact with their environments; in fact, interaction with the environment is often cited as a criterion for "life". The above models for the formation of the first cells depend heavily on continuous interaction with environmental cues to drive the biochemical evolution that resulted in cellularity. According to the theories, the machinery for interpreting the DNA was also responsible for writing the DNA, such that the information for interacting with the environment existed before the DNA did. In terms of the developmental cues that are necessary for the interpretation of the genome to form a multicellular organism, I would direct you to another previous post:

How is the DNA interpreted when a fetus is forming?

This also brings up another query of mine how exactly can we be alive if we are just a bunch of atoms carrying out chemical reactions and dont tell me respiriation makes us alive because it is just another chemical reaction.

Well... it depends on your philosophical interpretation of "life". If you believe that life is more than chemical reactions, then there must, accordingly, be something else beyond simple chemistry for something to be alive. If you believe that complex chemical reactions are sufficient to produce life, then there's no reason to expect something more. Many scientists suggest that it is the complexity and dynamics of interacting chemical reactions that are the foundations of life. In fact, you'll note that all of the prebiotic theories involve the formation of complex biochemical processes before the advent of the cell, hinting at a common belief among biologists: that simply combining the chemical components of a cell is not sufficient to form life. The dynamic equilibria between all of the reactants and products must already be occuring (usually handed down by a "mother cell") for the cell to live. For a more thorough (i.e. better) discussion, follow the links below:

Neil Saunders' answer on chemistry and life
Links to sites about the origins of life

Hope this answers some of your questions,
Mike Onken