I know what it means, but when did they first use the name and why did the pick it??????

It turns out that the "John Doe" custom dates back to the reign of England's King Edward III, during the legal debate over something called the Acts of Ejectment. This debate involved a hypothetical landowner, referred to as "John Doe," who leased land to another man, the equally fictitious "Richard Roe," who then took the land as his own and "ejected," or evicted, poor "John Doe."
These names -- John Doe and Richard Roe -- had no particular significance, aside from "Doe" (a female deer) and "Roe" (a small species of deer found in Europe) being commonly known nouns at the time. But the debate became a hallmark of legal theory, and the name "John Doe" in particular gained wide currency in both the legal world and general usage as a generic stand-in for any unnamed person. According to Mr. Dickson, "John Doe" and "Richard Roe" are, to this day, mandated in legal procedure as the first and second names given to unknown defendants in a case
SOURCE:
http://www.word-detective.com/112701.html

WOW, great reply, thank you!