Need help picking the right rear derailleur and chain for Giant Escape 2 Product page for the bike i have: http://www.giant-bicycles.com/en-us/bikes/model/escape.2/14810/75679/#specifications

I'm not able to make sense of the variations of shimano altus derailleurs,
here's one:
http://www.amazon.com/Shimano-RD-M280-Altus-Rear-Derailleur/dp/B00WY0NRYA

And would the , KMC Z7 6/7/8-Speed 116L Shimano HG, be a good replacement chain?
All 8- and 9-speed Shimano mountain derailleurs are compatible. Just pick one that you like. The one thing to worry is long cage versus extra long cage, and unless you know you have an extra wide range of gears, long cage is fine.

The chain is also fine. If you are changing the chain because is worn out or "stretched", you should probably replace the rear cogs too.