Why does David ask Hashem to gather Yisrael from the nations? They were not exiled in his days!
Radak, Malbim: This refers to when they will be in Galus.
Why does it say "Lehodos l'Shem Kodshecha"?
Malbim: In Galus, we can praise only Shemecha, but not Shem Kodshecha, which implies conduct elevated above nature, when Kedushas Yisrael is coordinated with Kedushas Hashem. It says "v'Shav v'Kibetzecha; u'Mal Hashem Elokecha Es Levavecha" (Devarim 30:3, 6).
What is the meaning of "Lehishtabe'ach bi'S'hilasecha"?
Radak: We will be elevated over all nations, in His praise, i.e. the Chasadim that He did with us when we praise Him for them.
Malbim: Shevach is elevation over the previous level or over another's level. We will rise via Your praise, through coordinating our ways to Your ways. Just like He is merciful, you should be (Shabbos 133b).