Typically the way I have setup Wordpress and Moodle is that you go to Moodle first. Inside a moodle course you have an External Activity. That External Activity connects to Wordpress MultiSite (Important difference: Multisite) and Moodle will create a new site in the WP Multisite setup and then automatically add users from Moodle as they click on the External Tool Activity.
For Moodle, you always enter the Wordpress LTI URL. For instance depending on which LTI plugin you are using it could be different but my setup always uses http://yourdomain.com/?lti Then the plugin and Moodle take over and create the new site and display it either as a pop-up or embedded. I don't create a subsite. Moodle and WP do that and use the Activity Name from Moodle as the title of the new blog.