The way Zahn himself tells it, the idea of the capital city-planet itself already existed and was present in the West End Games RPG and its related books, and he used it since he'd been directed by Lucasfilm to tie his stories in with that material.

In the West End source, however, the planet's name was Imperial Center. Finding this to be an unacceptable name for a planet, which should have its own culture and history and so on, Zahn came up with the name Coruscant as a derivation of 'coruscating', or glittering, as a reference to the many lights a gigantic city would produce.

In-universe, this discrepancy of naming is attributed to the Empire's revisionist portrayal of history. Apparently, Palpatine changed the name of the planet to Imperial Center when he came to power, and it had only just been changed back to its original name when the New Republic decided to set up the government there.