Use the right stick to move the camera focus to NPCs / chests / opponents; as long as you are close enough you should select / target whatever the crosshairs in the middle of the screen are pointing at. Most of the time you shouldn't have to specifically select opponents; the auto selection is usually fine unless you want to manage tougher fights more carefully (take out a healer first, finish off the weakest opponents to reduce the number of attackers, etc).
With the game paused (right stick button) or not, moving the right stick quickly left or right will cycle through available targets. Holding the left trigger will lock on to a target, and if you are playing the original release of D2:ED it will zoom the camera into an almost over the shoulder view (the DKS release with the remastered D2:ED and add-on FoV combined uses a closer camera view by default, and Target Lock doesn't move it any closer).
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