Create a Connection: You need to link the ExpressRoute gateway to the ExpressRoute circuit. After this step has been completed, the connection between your on-premises network and Azure through ExpressRoute will be established. Hence this is correct option.
Create a local site VPN gateway : This will allow you to provide the local gateway settings, for example public IP and the on-premises address space, so that the Azure VPN gateway can connect to it. Hence this is correct option.
Create a VPN gateway that uses the VpnGw1 SKU : The GatewaySku is only supported for VpnGw1, VpnGw2, VpnGw3, Standard, and HighPerformance VPN gateways. ExpressRoute-VPN Gateway coexist configurations are not supported on the Basic SKU. The VpnType must be RouteBased. Hence this is correct option.
https://docs.microsoft.com/en-us/azure/vpn-gateway/vpn-gateway-howto-site-to-site-resource-manager-portal
https://docs.microsoft.com/en-us/azure/expressroute/expressroute-howto-coexist-resource-manager
https://docs.microsoft.com/en-us/azure/expressroute/expressroute-howto-linkvnet-arm