Tri State Logic- Is it correct

No, not quite. Altera does not have embedded tri-state drivers throughout the part, they have tri-state drives at IO pads. So, you can use one tri-state DRIVER to drive the output at a pin. If you want to select between two different possible signals to output, such as the paths going from right to left in your drawing, you should acomplish that with logic. When you have a result, then you can drive that out or tri-state it with one tri-state driver that can drive the output pin on the left. It would be easier to describe with code if you are comfortable with verilog or VHDL.