With respect to the cipher to chose -- that is
aes-cbc-essiv:sha256 (the old default) versus
aes-xts-plain64:sha256 (the new default) -- I've explained all this before in this answer:
How secure is Ubuntu's default full-disk encryption?
As for which filesystem to use -- obivously using a partition directly is going to give you the best performance: there's no second translation layer getting in the way between your pseudo block device and your real block device.
Since that appears to not be an option for you, then I'd recommend one of the EXT filesystems rather than one of the newer copy-on-write ones, since random-access to a large file with a COW filesystem would be messy. EXT4 is obviously the most recent and arguably most resilient of the lineage, though if you only have one large file then most of the FS features don't come in to play. So in that sense it probably doesn't matter a whole heap which filesystem you use. You're not really using the filesystem features.
As long as you allocate your file entirely at creation (as you've demonstrated in your question, as opposed to creating a sparse file), your file will be one contiguous block and the filesystem becomes largely transparent to your operation. Also, allocating your file BEFORE putting the other files on the FS will get your file closer to the start of the disk, which makes its access sometimes a bit faster.
As for security: (a) don't give out your password, (b) don't let anyone touch your computer. There's not a lot to it. Since you're running on an unsecured device, there's really no meaningful additional protection that can be put in place. If you encrypt your whole computer then perhaps you'll have something, but as it is, just be careful of how it gets used.