Not completely clear from the images but it seems you are using non persistent entities like in the model below:
These can be used in a dataview of Entity and a Listview of Entity2 in a nested fashion, but be aware of the datasource settings, see below:
The selection issue might be caused by setting the listview datasource to database or xpath and in those cases the nesting is not allowed. Hope this helps in finding a solution for your UI challenge.