Why did Hashem ask Kayin where Hevel was (as if He didn't know)?
Rashi: This was Hashem's way of entering into a conversation 1 , hoping that this would prompt him to do Teshuvah.
Seforno: He was actually asking him where he had buried Hevel - for the same reason as Rashi gave 2 .
How did Kayin interpret Hashem's question?
Rashi: Kayin took Hashem's question literally, and tried to fool Him into believing that he didn't know where Hevel his brother was. 1
Seforno: Since Hashem's words wards did not come in the form of a prophecy, Kayin thought that Hashem does not always know everything that occurs, and was simply asking for information.
See Sifsei Chachamim as to why Rashi did not say the same about Adam in chapter 3, Pasuk 9.
Why did Hashem need to say, Hevel 'your brother'? There was no other Hevel!