How does Michael Myers choose his victims

According to Collider, the makers didn't exactly put much thought into that scene:

So why doesn’t he kill the baby?

That’s the question Collider’s Perri Nemiroff put to director and co-writer David Gordon Green when she sat down with the filmmaker to chat about the film. “Why doesn’t he? Because that would be so rude,” Green said. But does Michael think about it as an option when he stops? “I think it was a consideration,” he explained.

Green continued and explained the origin of the scene, which was a quick write-around after an unexpected road bump in production. “Yes, it’s terrifying in its own right. And it was a last minute idea — I mean, why is there a baby crib in the living room? It was gonna be her husband sleeping on the couch, but then he didn’t show up and we scrambled and put a baby crib in there. And then, yeah, I thought it was interesting to see one ethical choice that he made in the movie. So that’s the one ethical choice he makes.”

Note that Green offered a slightly different story for the presence of the baby in another interview:

The baby idea happened on set. Why would a baby crib be in the living room of the house? But the art director had that idea at the last minute. He's like, 'There's this blank space. We need some narrative there. What's the story?' And so we scrambled and found a little mobile.

[...]

But that was just a last minute idea. A perfect example of something we'd rehearsed and thought we had it all figured out, and in the last minute we're like, 'There's this boring gap here.' It was going to be her husband asleep on the sofa, and it's like, 'Who gives a shit about her husband asleep on the sofa?' But a baby crying, you're like, 'Oh, there's an ethical choice here.'

That same interview reveals that some of the sound of the baby was created by Jamie Lee Curtis.

The scene basically exists to fill time:

"We were looking for an interesting 15-second gap in a long sequence. And there were 15 seconds, no tension, no new information," the director detailed. "And the goal was, ‘How do we put something that's 15 seconds’ worth of intrigue in the sequence?’ And the production designer and the DP came up with the idea of putting a baby crib in the living room and then a baby. It was one of the things that was just exciting, and it fixed the problem; it filled the gap."

The director admits that this is inconsistent with the character:

"And now we're looking at a character who I proclaim is the essence of evil and has no motivation, no emotion, no real stimulation other than being a predator," the director added. "And yet we've given him this one consideration in which he does the right thing. So I'm not exactly sure how to stand by that and justify that, although I think it's fascinating to think of someone that is nothing but a cold-blooded, faceless, motivation-less killer. He made one decision that we are happy that he made."

(Note that the actual source for these two quotes is an interview with the L.A. Times, but due to GDPR blocking I cannot access that one.)