Does Skritter teach the writing of traditional Chinese characters? or does it only support simplified Characters?

Yes, it does. Go to your account -> study settings -> character style and set it to "Traditional" or "Both"'. More info here: http://www.skritter.com/faq#character_support

There must be a bug here or I'm missing something but I've selected traditional Chinese only but I only get simplified Chinese for handwriting. For pinyin review it shows traditional though.

You've selected "Both" now, which means that when new words are added, you'll see both forms--but not at the same time; they're spaced apart from each other. All the words you already added will just be simplified until you go back to the beginning of those lists and add them again from the list to My Words while studying; it's just the new words from the time you changed to "Both" on which will have both simplified and traditional writings. But the traditional writings for those will come soon, after you've gotten each simplified writing out of the way.

Thanks. I did finally get a traditional word. Looks like its working.