I was wondering why you had "hilite" in the command in the first place. It works for me without the "hilite". Once I run the command it jumps to the entered RefDes. The lower right corner of the GUI shows 1 selected object (pre-selected) and that is what zoom selection is centering on.
Maybe you have something in your environment that is causing it not to work. I would rename you PCBENV/ENV and create a new one with the first line being source $TELENV and the second line your Function Key alias and give it another try. Here is an example:
funckey F "generaledit; prepopup ; pop dyn_option_select 'Selection set@:@Clear all selections' ; set prompt ; prompt 'Enter Ref Des (on next step click pattern to keep it highlighted' ; refdes $prompt ; zoom selection ;generaledit "