How are Characteristics linked to Problems in the Story Engine?

I noticed that the items in the list of possible problems (and solutions, symptoms & responses) are the same words that can be seen in the Characteristics panes. So both the MC and the IC have a problem, solution, symptom & response that can be found over there as well. Yet none of the Characteristics gets casted automatically.

Should I do this manually? Or how can I make best use of this Characteristics pane?

The Characteristics pane is the same as the list of elements. Only the Crucial Element gets cast automatically.

So, yes, do it manually. I prefer to do this after writing a draft, and I don’t generally spend much time here, but some other writers do. I will let them give you a better answer.