Qualifications are normally an aero-eng degree, and whatever aero-medical training needed for the type. As a rule, the FTO is an Engineer who has been working for some time with the project and is more familiar with the nature of the tests than the TP, so that he/she can guide the testing as efficiently as possible. The only people I know employing anything close to full time FTOs are Westlands, but even there they are really FTEs very involved in the planning and reporting process.
I'd also recommend that any FTO should know their way around the groundschool and FRCs for the type at least as well as the TP.
Duties are primarily to operate any test equipment on board, to drive the testing side - often plotting rough graphs or tables through the flight to ensure that you go back with all the required data, this usually involves a fair amount of manual data recording and rough initial calculations as you go along. Sometimes where a lot of data is needed quickly (such as spinning) data recording is split between TP and FTO.
Secondary duties are as lookout whilst the pilot is concentrating on tasks, as prompter for challenge and response checklists (especially in emergencies), and in multi-crew aircraft, making the tea. In small aircraft, they may also be used as self loading ballast for lower risk tests.
G