@Ajith_P_V Yes that is right, you don't need to add the physical device. That was really just an extra option in case that was convenient to you later on : )

Have a look at creating kits for cross compiling in the qt docs if you can find it! - there are quite a few bits of info out there that may fill in the gaps I have left. I only gave the general steps required.

@okieh

As it looks to me the installation of Qt 5.2.1 is broken. If possible you should also install the newest version of Qt libs IMHO.

However, from personal experience it might be also worthwhile to update your Ubuntu. I am operating a server with Ubuntu 12.04 and had quite a bit of trouble in connection Qt 5 there. Luckily the admin there, "some" version (5.0 or 5.1) to work at least moderately.
On Ubuntu 14.04 on my desktop everything worked like a charm.
Finally I like to state that I am developing on Windows. Therefore, my Linux knowledge is limited as well.

A clue of sorts has presented itself.
The Variables button does appear when editing the working directory of the Project>Run setting>Run configuration.
That answers my second question, but the first remains.

Thanks anyway Sandy. This is a weird one to be sure.