A player may choose not to attack during a turn, even if they control "Lancelot, the Knight of Mad Demon". However, Lancelot must attack before any other J/resonator on his controller's side of the field, unless another J/resonator has the same restriction, in which case you must decide between them.
Lancelot's automatic ability is mandatory. The target is chosen when the abilty is played to the chase. If he has 1000 or more ATK when the ability resolves, he must do 700 damage to the chosen target. If he does not have 1000 or more ATK when the ability resolves, the ability will not do anything.