Restoring Scrivener projects is no different than restoring any other type of file, like a .docx or .pdf. You just open the location where the project resides in Finder, enter the Time Machine interface, scan back to where you need to be (it sounds like you’ve gotten that far) and then select the .scriv project you need to restore, and press the Restore button. If another project already exists in this location by that name, it will ask what you wish to do, but I’d recommend moving the damaged project out of that location first.
I’m not quite following what you mean by this, but you have to highlight the .scriv file yourself.
As for what happened—are you running any kind of “cleaning” utilities on your Mac? Is there any other automation, like Hazel or Keyboard Maestro that you use? The key thing to know here is that Scrivener projects are actually folders with lots of other files inside of them. I’ve heard of some utilities gutting out projects of “old files”, particularly if they are stored on the Desktop. Another thing I can think of is Google Drive, is the project stored in the Drive folder, if you use it?
One thing I would do is right-click on the damaged project in Finder, and select Show Package Contents. Navigate into the Files/Docs sub-folder, keeping an eye out for files marked as “conflicted”, if the project has ever been synced. In the Docs folder, do you see a lot of RTF files in here? Try using Quick Look and scan through them, seeing if the text is actually there.
I wouldn’t worry about leaving text selected. Text selection is stored separate from the data.
Since your project is more recent, you probably have several automatic backups to choose from. Open the backup folder via a button in the Backup tab in preferences, and scroll through the list looking for your project name.
You’ll find tips for restoring from these backup files in the user manual, starting at the bottom of page 67.
Out of curiosity, what version were you upgrading from?