Why do scientis think Earths core contains iron?

Because "molten iron, moving very fast, does in fact produce a magnetic field". Even if that iron isn't molten moving a solid conductor, such as copper, fast will still produce a magnetic field. Crude electromagnet experiments, such as those spun by hand, are evidence of that fact.

If the Earth's outer core was "dead" (solidified) as it is on the Moon, and Mars (to a lesser degree), we wouldn't have that field and the atmosphere would have been long ago fried away by the solar winds.