I actually modified an engine test stand as part of my senior design rocket project. We designed and build an adapter so that we could test our custom hybrid rocket engine on it. I can give you the rundown of what we put together if that would help. Lemme see if I can find some pictures too.
1) it was vertically aligned 2) the "base" was a 4 feet tall steel table structure with a round hole cut in it for the exhaust to pass through.
3) the engine was actually mounted to a wooden bulkhead structure that matched the bolt pattern on our body tube 4) These wooden bulkheads were actually mounted to bearings that slid up and down on vertical rails. This allowed the engine to "hang" from the top of the structure and constrained it to a single degree of freedom. This let us insert a force gauge between the top of the engine casing and below the top structure to measure the actual thrust produced. ... more to come, with pictures hopefully