This card doesn't heal Guise for each card that's milled, just the one's that are targets (i.e. have HP), correct?
Yes. Targets have to be discarded for Guise to get any health. So if you are playing a target low environment and villain there is a good chance no health is gained.
Great time to play it: Imbued Vitality. eg
I'm not sure he would gain health from Ongoing or Equipment cards due to Imbued Vitality as they would have to be in play for them to be a target. Going immediately to the trash they wouldn't be considered a target as they have no innate health.
Imbued Vitality doesn't say they have to be in play. Cards in the deck and trash still have Keywords, which we know thanks to cards like Impromtu Invention searching for the cards. So I see no reason why Imbued Vitality would not make Ongoing and Equipment cards in the deck or trash have 6 HP.
I thought it did say in play for some reason so I would agree in that case.
For the record, in the video game all the equipment and ongoing cards in your hand (and deck if you can search it) show a bubble with 6 HP while imbued Vitality is in play.