So, if the Balor is in the back, protected by other devil minions and no one in the party has attacked him yet he should target either the closest PC or a random enemy?
Why even have a DM at this point if one of the most intelligent foes in the game is just going to attack like an non-intelligent undead?
The problem is another metagame issue. Namely, everyone is at the table to have fun, and its the DMs job to try to keep the game enjoyable. The player of the wizard may very well feel that his or her character is being picked on, and by extension, that he or she is being picked on personally. I would assume that if the wizard was specifically targeted, and his or her character gets killed as a result of the encounter, the player might have bitter memories of how unfair the DM was.
As for the Balor's intelligence, I think of it as being tempered by it's arrogance. ALL humans just look like soft and squishy mortals to it. It might no more distinguish between humans than we distinguish between ants. The differences that we treasure, that we think show our individuality, might be simply imperceptible to an alien intelligence used to ordering its mental world differently.