I am running Linux 8 (kernel 2.4.14-18) on my machine. Sometimes the system become too slow, even I can't move the mouse. When I checked the process status using "top" I found "X" taking 99.9% of the CPU. This happens often. What is the reason behind this? DO I need to kill any application?

We will need some details:

1 - What is Linux 8? Is it Mandrake? Redhat? SuSE?

2 - What are your sys specifications?

3 - Which desktop/window manager are you using? Gnome? KDE? Fluxbox?

...

Here are the details
1. It is RedHAT Linux 8
2. I am using DELL POWEREDGE 400sc machine with 40GB hard disk and 2GB RAM.
3. I am using Ximian Desktop Manager.

Hmm, with your hardware you should be flying.... Few pieces of advice though:

Ditch Redhat and go Gentoo .
Shutdown all unneened services, redhat has a lot of stuff that is useless for you and its starts it all up and that eats up cpu
I do assume that you partitioned properly and have at least 1 gb of swap space, otherwise your problem is easily identifiable as memory paging.
Recompile the kernel, while it sounds pretty nasty, and you will likely mess it up few times at first, it gets much easier with practice and you WILL need it eventually.
Seriously now, ditch RedHat, its not even supported anymore.

That seems to be more like a hardware related problem then a Redhat issue, meaning that using Gentoo won't guaranty any better performance. What I would recommend in this case is using a light desktop manager, as blackbox to see if there are any major improvements.

If not, try tweaking a little bit your XF86Config, located at /etc/X11/, as changing screen resolution, monitor refresh rate and video driver. Also, talking about video driver, if you've got a nvidia, I highly recommend you getting the official drivers from nvidia's page. It will make wonders.

Also, you really have no need at all for 1 GB of swap space. Swap is nearly _never_ used under Linux, and with 2GB of memory RAM, you can be sure that RAM will be enough, unless you are running a big server on it. Make a 256MB swap partition, and that's it.

And about Gentoo, make sure that you have a lot of time (and by a "lot", I'm being kind, the correct is, make sure that you "don't have a life") compiling an insane number of programs. If you need i686 optmization, get a i686 distribution and save the time to have some fun with your computer, ratter then wasting days compiling KDE, and you will not even notice the difference to be fair .

Remembered something: Oh, also check that the bios setting for the cpu is NOT set into compatible mode, that seems to kill performance on 400cs. (and yes i actually own one of those and infact its my primary home machine)