what is the best way to put scratches nicks and cuts, etc on a model, and what preparation is needed?

It depends on what type of scratched and nics, etc you're talking about.
You could add scratches and cuts in the model -AFV - itself or to the paint job of the AFV.
To add those scrapes and such in the model prior to painting you best to use a moto-tool like a Dremel. On a low speed and with an engraving bit just add (very little at a time) little cuts and scrapes and scratches in the model. Be aware that most of these damage markings would be in the lower portion of the AFV's hull sides, and most would run horizontally as the vehicle scraped against something while in action.
The other is to depict scratches in the paint. To do this I use a piece of stretched spue a very thin one, as my paint brush. Just dip the sprue brush in the paint (usually a raw metal - not a bright silver) and just paint the the model in strategic places to add the scratches. Like corners, hull side, turret sides, front hull - glacius plate, etc.
I hope some of this made some sense.

I know this will not make me likeable but look here this is pretty good. And as we are all in the same boat This might be good for anybody
http://www.missing-lynx.com/articles/other/awpaint/awpaint.htm

Here is a little food for thought....

A dremel would work wonders for this kind of damage....

John

In the second Pic,is the barrel split? sure looks like it. Was this a range target at sometime in its life?Good closeup pics :-)

I have to second the article that sgtreef put a link to. I don't use all the methods he talks about, but that article has changed my model building a lot in what I think are good ways. Don't be affraid to try some oil paints, I was a little but now I love them to death.

As the author states in the article, he is over doing some of the methods to better show them so keep that in mind also.