If you want to have him commanding the entire army, click on the golden arrow next to the current commander's name. This will change between the commanders that are stacked with the army.
I don't think this works (haven't check though). At least in the BG it was always the highest ranking officer that lead the army, and his values ysed for combat (this does NOT apply to the siege value, where the highest value is used).
To get a lower rank general to lead an army, split him off and reoragnize so that the higher rank is left with only 1000inf and move him away.
Second question; in one case it told me a commander had arisen in a province where there was no army or navy, and I still couldn't find him. What should I be looking?
?? never seen that, shure your looking at the right place ?
Anyway, check in the ledger for him. Will give you a clue for where you should be looking (land or sea).