SetSelection(Index) simply scrolls the listview so that the item at Index is on the top. It doesn't set any background color to indicate the selection. It is understood that the item at the top is the selected item.
Now regarding Listview item background colors, you cannot set a particular background color for a particular row alone. Listview has 3 types of layouts - SingleLine, TwoLines, TwoLinesandBitmap. If you set the bg color of, say the SingleLine, all SingleLine items of that listview will have the same color.
I see that you are using TwoLines layout. Now what you can do is define one bg color for TwoLines and another color for TwoLinesandBitmap. After that you can remove the bitmap inside TwoLinesandBitmap with Listview1.TwoLinesAndBitmap.ImageView.RemoveView, so that it becomes identical to TwoLines. Inside the loop, add all items with TwoLines, except when Row = MyIndex, add that particular row with TwoLinesandBitmap. That way, that particular row will inherit the bg color of TwoLinesandBitmap while the others will get the color of TwoLines.