Translation:Where is the exit?
For those wondering why くち changes to ぐち, it's a phenomenon called rendaku.
Basically, if there are 2 words that form a compound such as 出口 (exit + mouth = exit) and 入り口 (enter + mouth = entrance), the first syllable of the second word is usually voiced which in this case change the く into ぐ.
ひらがな (hira + kana = hiragana)
ときどき (toki + toki = sometimes)
And many more. I encourage you to look for it by yourself. 頑張って！ :)
He's assuming that your English is perfect and you fully understand that he's just saying "you're right, that is stupid."
saying "this might sound stupid but..." is a very correct way to say "please don't judge me, but..." in English. (for anyone who isn't an English native speaker)
Not always, but in this situation they both work.
どこ is a much broader "where", like asking for a point on the map
どちら is directional, "which way", like asking which path you should choose
どちら can also be used similarly with どれ (which one)
どれ being more open with many options to choose from
どちら being used when there are more limited (3 or less) options.