Whats the best way to go about that
you can flash the sbf then itll guarantee you wont have any problems updating.
I have no idea what that is, how to do it, and what it does....sorry im a noob
It resets your phone totally to stock. You lose all personal information and have to set the phone back up again. It's giving you a completely clean, fresh slate to work with.
What exactly will I loose in the factory reset? contacts? just free apps right?
You'll lose EVERYTHING. The paid apps will show up in your market (it's linked to your gmail account and you DID pay for the apps), but you'll have to reinstall them/set them back up.
Think of it as opening the box again and pulling your Droid X out -- only with a few scratches. :)
So my contacts will come back?
if you are synced with google, yes.