Hi mack-9, welcome to the forum!
Our Bluewater Manual is pretty good on these subjects -- just follow it.
Your running xerver software needs its dependent packages. If new xserver-xorg packages come into the sid repos, and you try to dist-upgrade with X running, it's going to pull in the new packages and their dependencies, and then dpkg will try to replace/upgrade your existing packages (which are being used by the system at this very moment) with the new ones. So you might get wreckage. But if you do the dist-upgrade in runlevel 3, it's no problem -- the new packages replace the existing packages, and when you go back to runlevel 5 everything works like it should. :wink: