It's an assumption that the World Engines have the capacity to terraform planets to that degree. By the time we see Krypton's civilization at its end there are no sister planets, no colonies, and nowhere to go. This strongly implies that World Engines could not transform any location of their choosing to be Kryptonian habitable. When Zod and his crew are shown at a dead colony, the environment isn't terraformed despite possessing a completely functional World Engine (which Zod commandeers).
Therefore, the easiest explanation for why Zod did not simply select another planet was because he couldn't. It was beyond the World Engine's capability and his search for a new suitable environment was unlikely to be more successful than the Great Age of Expansion with the entire planet behind such process. Zod's only advantage was the Phantom Drive, however, we cannot presume that either the Phantom Drive or the World Engine are infinitely usable resources. Quite to contrary. If Krypton's resource issues could have been resolved by unlimited consequence-free energy, the planet would not have been driven to collapse. Thus, it is plausible that both the Phantom Drive and the World Engine are finite resources.
That being the case, Zod wouldn't arbitrarily or inefficiently attempt to terraform that which is unlikely or unable to sustain Kryptonian life... it would have to be a location that met all the necessary specifications for a new civilization.