A Torah scroll is written entirely by hand by a trained scribe, a sofer, using a quill and specially prepared ink on parchment called klaf that has itself been processed according to Jewish law from the hide of a kosher animal.
Who may write one, and how exacting the work is
Writing a kosher Torah scroll takes a sofer roughly a year of careful, uninterrupted work, since a single letter malformed or touching another can render the entire scroll unfit, posul, until corrected. In Orthodox practice a sofer is male and specifically trained and certified in this discipline, a restriction some non-Orthodox communities have begun to set aside by training women as scribes. Completed scrolls are increasingly checked against computer software as well as by a second human proofreader before being certified fit for use.
Contact, and what happens when a scroll fails
A scroll is never touched directly with bare skin during the reading, which is the entire reason the pointer called a yad exists, and a scroll that becomes torn, faded, or otherwise posul is not simply thrown away. It is stored, often for years, in a synagogue's genizah, a repository for worn out sacred texts, before eventual burial in a Jewish cemetery, the same respectful disposal given to any document bearing the Divine Name.