Best model type to use?
It all depends, if you want to make fun, not AAA sized games, the .X format can be fine. It supports tangents/ bitangents for normal mapping, multiple UV's sets, animations, shaders etc.
If you're aiming for "big" you might want to consider setting up your own asset pipeline (google for more details). Which basically lets you create a set of data that's exactly needed for your engine/ application, without waste and in an optimal memory structure (thus giving speed, shorter load times etc).
Also it depends on what tools you have available, if you're using d3d9, you can use the d3dxmesh class to easily load (animated) meshes in the .X format. If you're using d3d11 or sth, you can try assimp and can basically choose any other format that can be exported from your modelling application.
If you go for .X I suggest kwXport (from good experiences from first hand).
use the one that will bring you what you want to achieve.
That's good advice.
what currently is the best model file type to use?
If you're looking for a long-term solution, I would recommend that you create your own model format to use for your game assets. To support that approach, write a separate app (independent from your game programs) which exports your model format from other formats - and you could start with DirectX X files, if you have models you like, or you have experience with them.
That converter application could be based, for instance, on the assimp library, which can import several well-known formats, including x-files. That conversion app, as mentioned, would import a file (such as a DirectX x-file), extract the data needed, and export model data to your custom format. If you find other models you'd like to use in your games, add other model formats to your converter application.
That overall approach allows you to write game applications which create assets from just your custom format(s). You needn't choose x-files, FBX, OBJ or any particular format for loading into your game. As suggested, you can simply add the capability to your converter to import another format as desired. Over time, it's likely you'll find a model somewhere that you want to try out. With a converter app, you don't have to modify your game to do that.
EDIT:
the .x 3d model type that im currently being used is outdated
The DirectX X file format isn't actively supported by Microsoft. I'm not sure "outdated" is the correct adjective. I have dozens of x-files I've collected over the years, and I still use them - modifying them and converting them to my own format as needed. Blender (my favorite modeling program) has a DirectX exporter addon which works fine. I consider that as part of my asset pipeline. I'm not about to toss any models or code because someone says they're "outdated." Phooey. Good data is good data.
