So I tried setting up SFML 2.0 with Codeblocks but I just can't seem to get it to work, I spent all day trying and I kept coming up with error and lack of a good tutorial would just be learning hell
Then I tried SFML 1.6 and I got everything working fine and I can easily find tutorials over the internet, it just seems like the easier option but it is the older option
Is SFML 1.6 too outdated to use and I should try and get SFML 2.0 to work or is SFML 1.6 fine to use?
If you're happy with SFML 1.6 and it has the features you're after there's no reason you shouldn't continue to use it -- it isn't going to suddenly stop working, and it's reasonably stable with no major bugs. It's not overly old, but you'll obviously be missing the new features added to SFML 2.
Alternatively you could see if you can get help with your problems with SFML 2 -- but yes, SFML 1.6 is still usable.