I want to be able to create a duplicate database and update / refresh it daily automatically. This database copy would be used for testing purposes so I don't want it to write back to the original database. Is replication of some kind the answer?
I should have said that the Test database is on a different server.
I have tried doing a Backup via Enterprise Manager and then moving the backup file to new server, but I cannot seem to pick up the file for a restore as only the local databases are shown in the parameters box.
Use the "Restore from device" option and then browse to your backup file. Check Books Online for more assistance restoring databases in Enterprise Manager. The big things you need to watch out for are crossed logins and object ownership between the two databases, are their respective list of users and userIDs are likely not identical.
If it's not practically useful, then it's practically useless.