I presume you mean with the little 'radar' targeting circle thing? If that's the case, all the commands you want are variations on the T key on your keyboard:
Shift+T will show or hide the target radar.
Control+Shift+T will change the range of the radar.
T on its own will toggle through the types of targets it will show (this is what you want in order to find only air targets)
Tab will select the targets, toggling through them with repeated presses. Bad guys display in red, good guys display in blue. Neutrals and as yet unidentified targets display in white to indicate them being beyond the range necessary to confirm their identity, although if you can see they are over your side of the lines and flak is blasting away at them, you will know they are bad guys.
Depending on whether you have a target selected will affect how your fellow squadron pilots behave if you give the 'attack' command. If you have no target selected, they will attack the primary mission target, but if you have a target selected and give that command, they will attack your selected target. These commands work on a range basis too, since they are emulating hand signals, so don't expect an instant response if your flight is miles away, as it emulates you firing very lights to signal them. You can also split your flight into a tactical pair, which also effects how and what they will attack. Autonomously, your squadron buddies will defend themselves against threats regardless of whether you have a target selected or not, but how well they do depends on their rank and whether they are split in pairs, and ultimately it is their skill level which will affect their performance, so if you have good high level pilots in your flight, don't lead them into ambushes, as even a good pilot will be slaughtered in a bad tactical situation.
You can faff about with the preferences to alter skills of your flight and the skill of the AI when it comes to shooting too, so you can fine tune things to what you prefer. Needless to say, if you select a target, that is what you will padlock and also what the targeting cone will point to, with the cone pointing to the direction of the target from your position. If you are really into OFF and other flight sims, you might want to consider splashing out for Track-IR, which is much better for combat in flight sims and more like the real thing would be. You can see me using Track-IR and OFF in this video on Youtube which I made to show how you should fly a WW1 fighter plane:
The important thing with that video, more than the Dicta Boelcke rules, is that you can see I am using the 'lag pursuit' technique most of the time, which is something you can do even without Track-IR, so you are not at a huge disadvantage even using the OFF padlock providing you do things right. I would recommend assigning the padlock and cockpit views to buttons on your joystick, to make switching views easier and thus avoiding getting disorientated in a fight.
You'll probably find that using all those targeting commands takes away from the realism quite a bit, and you'll most likely end up preferring to do things for yourself, as it is more challenging to do that. If and when that becomes your preference, you can disable some or all of the targeting aids in the main CFS preferences, which you can get to from within the OFF preferences.
If you do go with no targeting aids, you will have to do what the real WW1 scout pilots did, which is climb like crazy so that you have an advantage if you meet bad guys, and watch out for flak bursts, which will indicate the presence of aircraft, and you can determine from the type of flak whether they will be friendly or enemy craft. The ability to do that sort of thing is what makes OFF more realistic, and certainly more believable than Rise of Flight, which is very scripted, whereas you are much more likely to chance into aircraft that are not specifically looking for you in OFF, and that is what makes it fun. Also, keep in mind that the clouds in OFF work as they did in the real war - i.e. you can hide behind them and 'stalk' enemy craft by using them to approach undetected. Track-IR is good for that sort of thing too.
Have fun.
Al