Concerning targeting via pad: (on 360 controller so change as needed)
I was using A to target nearest objects/enemies in front of me, even in FATE's. This was horrible, randomly selecting other PCs, or NPCs or some minor mob far far away.
Instead goto character configuration and select filters. Enable the filters (there are 4). Now in battle you can filter your target system on the fly. LB+B will only let you cycle/target enemies. LB+A will let you only target party members. It will let you know what filter you have in the bottom left above exp bar. But note, do not use A as this overrides the filter and will select anything. You must use the d-pad to target. Left will be nearest, right will be furthest and will comply to the filter setting
Hope this helps.