I do not claim to be an authority on witchcraft in general. This FAQ speaks for my tradition alone, and not for witchcraft (traditional or otherwise) as a whole. Please read this with that in mind.
In my tradition, witchcraft is defined as the practice of magic to achieve a certain goal. It is a craft and a skill. It can be as simple or as complicated as you want it to be. Witchcraft is not a religion, though it can be given religious overtones if the witch desires it to be so.
Though many people mistakenly use the words "Wicca" and "witchcraft" interchangeably, there is actually a distinct difference. A Wiccan may or may not be a witch, and a witch may or may not be a Wiccan. Some Wiccans choose not to use the word "witch" when describing themselves because of the negative connotation it has with many people. Likewise, there are many non-Wiccan witches (people who practice witchcraft, but have no connection with Wiccan spirituality). Wicca is but one tradition that may be associated with witchcraft, but they are not by any means one and the same.
A traditional witch is one who practices a tradition of witchcraft that pre-dates modern witchcraft movements, such as Wicca. These traditions are usually hereditary. Traditional witches are normally very hard to find and very secretive, so it is unlikely that you will find one advertising for students or trying to "educate the public" about witchcraft (handing out tracts, participating in public rituals, and so forth).
They might, but then again, they might not. It's all a matter of personal choice. Because the paths of traditional witchcraft are different according to each individual tradition, the ways that the gods are honored are different as well. Traditional witches may choose not to honor gods at all since the practice of witchcraft often does not involve religion, though there are a few traditions that do put witchcraft into a religious context. I think this depends a lot on the country/culture of origin in the tradition.
Again, the answer to this question will vary according to whom you ask. The way that it is seen in this tradition, "Either you have it in you, or you don't." Some are born into their tradition (Family Traditionals) and others simply "are," and may be recognized and adopted into an existing tradition and considered as a member of the family. Traditional witches have a very close kinship with and guardianship of the land and of animals, and feel that they have certain innate abilities. Traditions are almost always hereditary; therefore, you aren't going to find a whole lot of explicit information on it. Oaths and secrecy are very important to traditional witches.
I do not capitalize witchcraft for the same reason that I wouldn't capitalize "woodcraft" or "stonecraft." Witchcraft (with a capital "W") is generally used when one is trying to imply a religious or spiritual significance. Because I believe that witchcraft is essentially non-religious, I do not capitalize.
You're thinking of Wiccan traditions. Traditional witch, simply put, is pre-Gardnerian. Not all traditional witches practice witchcraft in the same way, or according to a set tradition. Another name for traditional witches is "classical witches." The name means only that trad witches do their magic as it was done before the advent of such traditions as Wicca and Wiccan ethics, such as the Rede and Threefold Law.
Though at first these two terms may sound alike, there is actually a distinct difference here, as well. A Fam-trad witch is one who is taught witchcraft by a living member of his/her family. A true Fam-trad (beware, they are more rare than some would like you to think) should be able to trace the teaching of witchcraft from living relative to child straight down their lineage. From my experience, most who claim to be a Fam-trad are most likely lying in order to sound self-important or confusing Family traditions with Heritage traditions.
A Heritage traditional witch is one who has inherited natural tendencies and abilities of witchcraft from his/her family line, but whose family is strongly influenced by Christianity. Heritage traditionals are not taught witchcraft per se from their family members; what they are taught is thought of as being mere custom or "folk ways" that are practiced within the Christian (or other) religion. People from families such as these are more likely to be drawn to magical systems, and are likely to be adopted into an existing witchcraft tradition. In Heritage traditions, "the power," may skip several generations before reappearing.
My advice would be, "Don't." That just reeks of evangelism. Just as a Wiccan doesn't appreciate it when a Christian tries to "save their soul from hell," traditional witches would not appreciate anyone telling them how to do their magic. Since traditional witches think the Threefold Law is not scientifically or logically possible, it would be pretty hard to convince them that they are subject to it. (Kind of like how a Wiccan wouldn't be afraid of going to hell if Wiccans don't believe in it.)
In short, no. Though many Wiccans feel that the practice of dark magic (hexing and cursing) is "evil," traditional witches are taught that a true witch heals with one hand and hexes with the other, or that a witch who cannot harm cannot heal. Dark is not to be equated with evil; it is truly needed in order to maintain the balance. Everything is defined by its opposite, so dark magic is practiced as well as light magic. Magic itself has no color; it is all in the intent of the practitioner. If one's intent is always to practice magic of one type while not including the other, this practitioner is thought to lack necessary balance. (Please understand that this is a gross oversimplification, but this belief would take far too long to explain and cannot really be "taught," only understood.) This belief does not make traditional witches evil - at least not in our opinions. The only way for someone to be a Satanic witch is for them to be a witch who worships Satan. To my knowledge, there are no traditional witches who would consider themselves Satanic, though there are some Satanists who consider themselves witches and who practice magic.
Just because traditional witches don't abide by a "harm none" ethic doesn't meant that we have no ethics at all. In my tradition, much emphasis is placed on knowing yourself and taking responsibility for your actions - all of them, both magical and mundane. As for my particular ethical system, please see the last sentence of question #6. ;)
If it were true that witches who don't follow the Wiccan Rede or believe in the Law of Three aren't real witches, then there have never been any real witches before the twentieth century. The Threefold Law is a distinctly Wiccan phenomenon. Before Wicca, witches never abided by any "harm none" ethic; in fact, much of the magic practiced by our pagan ancestors involved curses and hexes that could be quite elaborate indeed. It would be more appropriate, since the Wiccan Rede and Threefold Law are Wiccan concepts, to say that any witch not abiding by these laws is not a real Wiccan. No Wiccan that I can think of would admit to thinking that there have never been real witches before Wicca. That would make the Burning Times rather obsolete, now wouldn't it? ;)