No...in that case "mistranslated" would be better.

As I understand it, it means two things : 1: To misunderstand something 2: To explain incorrectly what someone has said So an interpreter could misinterpret something but if they knew the word and typed another one, which made no sense they have simply made an error.

Wow, this is a philosophical question! I say Yes, it is correct, because the possibilities 1. misunderstanding the speech 2. choosing the wrong translation are both examples of erroneous transfer of information. Both possibilities are instances of "misinterpretation". To understand this, it is helpful to look at the etymology of "interpret". It means to "explain between". It is a transfer of information from one place to another. Both #1 and #2 represent a failure of this process. If you really want to be specific that the translator understood what was said but chose a word that had a different meaning, then you have to use a few more words and say precisely that.