Dragon Quest IV/WMG

Psaro didn't know Alena was one of The Chosen Ones.
He was never after her at all -- it was the King he was after all along. The King's gift of sometimes seeing visions in his dreams threatened his plans, so he moved to take care of him. It was just a coincidence that Alena happened to be outside Zamoksva at the time, and a lucky break for her that the monsters moved against the castle during the Endor tournament... probably on the advice of Psaro's most powerful soldiers, like Aamon. If they hadn't moved right then, Psaro would have been there, and the final fight would have gone... poorly for her.
 * Alternatively, Alena would've killed him right there at the Tournament.

Psaro's Karma Houdini status was allowed because it would break the Cycle of Evil Rulers.
Just like Estark was destined to come Back From the Dead, Necrosaro would become a Sealed Evil in A Can even after you kill him, to be a threat to the world centuries in the future. Whether he deserved it or not, saving him and resurrecting his Morality Chain would nip this in the bud.

Dragon Quest IV is a prequel to Dragon Quest III
After the defeat of Estark/Esturk and (P)(Necro)Saro, Nadiria/Evil World was populated by normal people and over time morphed into Alefgard. That's why it's still the "dark world" in III.