I read in Computer Gaming World that the space battles are 3D graphics based on a 2D plane, so basically you control everything in 2D, but the action happens in 3D, for example, you can only click go here in 1 altitude, but when the X-Wing goes there or attacks soemthing, it moves in 3D.
Vader's wife was very pregnant when she died 19 years ago. All of a sudden a 19 year old who is very strong in the force and has a distinct resembalance to him in his younger days rolls in from Vader's home planet with his old Master Obi-Wan (Who was the ONLY other person preset at the time his wife died. And to boot, the kid's last name is Skywalker.
So in answer to your question, he knew Luke was his son because his name is Darth Vader, and not Darth Retard.
-Forum post on why Vader knew Luke was his son.