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If characters are the closest thing to a unit, can that unit choose between characters, or must it shoot at the closest character? For instance, my space marines are 4'' away from Magnus, 12'' away from a Herald of Tzeentch, and 20'' away from a Daemon Prince: Can I choose my target, or do I have to shoot the Magnus?

What if the nearest target is in fighting, am I not allowed to shoot? or do I move on to the next viable target. What if that target is a character?

Sorry if this has been answered somewhere but I tried searching to no avail.

You'd have to shoot the closest Character. If two Characters are equidistant you can choose which to shoot. The exception is if any of the Characters have 10 or more Wounds on their Datasheet, in which case you can target them due to their sheer size.

If the nearest is in combat, you can't shoot it, and you can't target the next closest Character instead (covered in one of the FAQ docs). You could pick any non-Character unit not in combat as usual instead of course.

For reference:

From the Errata for Warhammer 40,000: The Rules:

Similarly, if in your Shooting phase an enemy Character and another enemy unit were both exactly 10" away from your firing model, you could choose which is the closest before resolving the shots – so you could choose to shoot the Character if you want. If two enemy Characters are equidistant from a firing model (and there is no other closer enemy unit) then the firing model’s controller can choose which of the two Characters is closest before resolving the model’s shots. Note that it cannot choose for them both to be the closest, so cannot split its fire between the two.

From the Designers' Commentary:

Q: If a model cannot shoot at the closest visible enemy unit for some reason (e.g. it is within 1" of one of your units) but the next closest visible enemy unit is a Character, can that model then target the character?
A: No.

And if it was unclear, if a character is the closest enemy unit you may still shoot at other non-character units that are further away if possible.

Thank you so much for the replies!