You could check the OnMouseWheel handler in the FractalLayout sample project.

ZoomFactor is not saved by SaveToXml. You could use SaveToXml(XmlDocument) and LoadFromXml(XmlDocument) methods to append additional information such as zoom state to the XML document. Or as an easier solution, set diagram.Tag = ZoomFactor before saving and ZoomFactor = (double)diagram.Tag after loading (if you aren't already using Tag for something else).

I hope that helps,
Stoyan