Tonguez said:
In fact it has never been too clear what the difference between a Timelord and a normal Galifreyan is, perhaps a Timelord is a Galifreyan able to form a symbiotic relationship with a TARDIS...
Although it is certainly not cannonical, and it certainly wasn't what they were thinking at the time:
We know that Time Lords are psychic, but not all Gallifreyans are (4th Doc says to another Gallifreyan, "You forget, we Time Lords are telepathic" in
The Deadly Assassin) and that this psychic ability has something to do with the ability to store and process "artron energy". We also know that, prior to his first regeneration, the Doctor referred to "my heart" and Ian Chesterton said that his heartbeat was normal. Simularly, the 1st Romana never mentions having two hearts, but the 2nd Romana brings it up repeatedly in her first story. It is reasonable to assume, therefore, that not only are Time Lords different from normal Gallifreyans, but that post-regenerative Time Lords are different from pre-regenerative ones.
When we first meet the Doctor in
An Unearthly Child, the Time Lord is on the run from his people. For some reason, he has taken his granddaughter with him. There is never a suggestion of his returning home until
The Sensorites, and that is immediately after discovering his granddaughter's latent telepathy, and explicitly for the purpose of further exploring that telepathic potential.
I would theorize therefore that Time Lords are selected from among those Gallifreyans who exhibit a high psychic potential, and further culled by rigorous examination and testing (which Runcible was noted to have failed in
The Deadly Assassin). This ability to store and manipulate artron energy (see also
The Invasion of Time) is no doubt crucial to bonding with a TARDIS.
EDIT: The process of becoming a Time Lord also, apparently, includes adding psychic blocks against violence (not very good ones, though, on the basis of the evidence available) and Rassilon Imprimature, which is necessary to create a stable TT Capsule.