Create custom action for Views Bulk Operations
I believe your type should not be entity but the actual entity type you want to use, like node. Then it should show up on nodes.

Also VBO requires no triggers to be defined, unless you want the action to be triggered via the action module as well. For just VBO this can be an empty array.
I have no idea what behavior is, never used it.

See an example of VBO with a form here: Add multiple friends at once with user relationships