1)
How did David know that Hashem chose Tziyon?
1.
Radak: That is where the Shechinah revealed itself.
2.
Malbim: This is why Hashem chose David's seed! Refer to 132:11:3:1.
2)
Why does it say "Bachar" and "Ivah"?
1.
Malbim: Initially Hashem chose it over other places. Afterwards, He desired it itself, not merely relative to other places.