What determines if a metal is suitable for transplantation such as in the hip? What I am most interested in however is why might some metals be toxic to animals once in the body?
There are a number of reasons why a given metal may be toxic to an animal:
The basic gist is that some metals are required for life, some aren't but aren't too terrible, and some are completely toxic to it. Different organisms can vary a bit in which metals are useful or not. A good implant will of course not be toxic at all, and will be strong and long-lasting. Titanium is often used, given its strength and general nonreactiveness, but so is cobalt, despite being toxic to some degree.
If the question is why a transplant implant like an artificial hip may be made from a metal, then toxicity issues of the metals are not the main question.
I think it would be better to focus on metal sensitivity.
Metal sensitivity is not a specific immune response as with transplanted organs, but a non specific response to a foreign substance in contact with the body. While Surgical stainless steel and similar hardened alloys which contain iron, nickel, chromium and molybdenum are popular for metal components of implants, even plastic coated pieces can cause scarring and irritation.
This reaction is highly variable from one individual to the next and can have no effect or cause further surgery or rejection of the implant. the cause is poorly understood and so diagnosis is still in an exploratory state.
Since oxidation and rust seem to cause more irritation, it seems that corrosion resistance is an important part of implant metal choices. Hardness, durability and Cost is also an issue since I'm sure gold and platinum would also be great choices from a cost perspective.
I think @Amory answer is a good one but I would like to add a new point for the last part of your question.
Our normal body cells can recruit the immune system when there is infection but the transplants can not. Some findings suggest that bacteria can form a biofilm over that part and so can become difficult to treat with antibiotics.
Source : I read this in a book called Good Germs, Bad Germs by Jessica Snyder Sachs