Crystal defects in Seeded Chemical Vapour Transport (SCVT) and hydrothermal ZnO substrates were characterised mainly by X-ray topography and diffraction. Zn1−xMxO (M=Co, Mn) epilayers were grown on hydrothermal ZnO(OO.1) substrate by Pulsed Laser Deposition (PLD). It is shown that the epitaxy strains are partially relaxed through dislocations in the 10.0 glide planes. The crystal perfection of the epilayers was analysed by high-resolution X-ray diffraction. Almost intrinsic rocking curves were observed for Zn1−xCoxO epilayers and the c-axis parameter increases proportionally with the Co content. This suggests that Co atoms are well located at substitutional sites in the ZnO matrix. A larger distortion of the ZnO matrix is induced by the insertion of Mn atoms. A paramagnetic behaviour was observed in Zn1−xCoxO epilayers with a low proportion of active Co atoms. A weak ferromagnetic behaviour was observed only for Zn1−xCoxO epilayers when a few Al atoms (1.6%) were incorporated.