IMO the lock-on needs to be very easy and user friendly.
Having different modes seems to complicated and helps only partially.
in my idea the lock on would be very simple:
1) you should be able to lock-on the target you are facing directly with highest priority
(there could be a option where you set the priority to nearest target or the target you are facing)
Selected the wrong target? no problem!
2) if you lock-on to a wrong target, instead deselecting it again, selecting a new, confirming you should be able to simple make a double click on the directional button to select the next target to the left or right.
This way you can simply switch targets with a quick double click.