The problem with the test in 28296 is that you were trying a policy test, and you had no policy defined. Note that a policy record and a selector record are two different things, and should not be confused. With DomainKeys, the selector is the record at: selector._domainkey.yourdomain.tld. This records holds your public key, and is necessary if you wish to sign messages. The policy record is _domainkey.yourdomain.tld. This is an optional record which can be used to define policy, i.e. how you want verifiers to deal with messages which failed authentication, for example. DomainKeys policy examples are available in the DKeyEvent documentation.
If your only problem was the policy test you mentioned, then there was no real problem. I see, though, that you have since removed the key from your 'key1' selector (which, again, seemed to be fine) and this is likely why you were receiving 'bad selector format' result from the sa-test reflector.
Setting up DomainKeys or DKIM is really not difficult, but you do need to take a few minutes and read the documentation. There is a bit of jargon involved here (selectors, policies, etc) but as long as you pay attention to what the documentation says, you'll see that it's really not complicated at all. The point is to try not to skip reading anything in the documentation; just take it slowly, follow the instructions to the letter, and you'll be up and running in no time.
As for the difference between DomainKeys and DKIM, well, a minimal selector (a selector which only has a 'p=...' tag defined) will work with both DomainKeys and DKIM. Policy records are defined in different records for the two protocols, but the essential public key follows mostly the same specs for both. So if you don't need any protocol specific settings in your selector, you can safely use the same selector for both protocols.
Which of the two protocols to use? If you're only going to use one, then at this time you should use DomainKeys. But really, I would (and I actually do) use both.
SmarterMail extensions:
DKeyEvent SM - DomainKeys/DKIM
SAVASM - SpamAssassin Virtual Appliance