Scala - 467 364 339 chars
object G{def main(a:Array[String]){val l=io.Source.fromFile(new java.io.File(a(0)))getLines("\n")map(_.toSeq)toSeq
val f=new java.io.FileWriter("out.txt")
f.write((1 to a(1).toInt).foldLeft(l){(t,_)=>(for(y<-0 to 39)yield(for(x<-0 to 79)yield{if(x%79==0|y%39==0)'.'else{val m=t(y-1)
val p=t(y+1);val s=Seq(m(x-1),m(x),m(x+1),t(y)(x-1),t(y)(x+1),p(x-1),p(x),p(x+1)).count('X'==_)
if(s==3|(s==2&t(y)(x)=='X'))'X'else'.'}})toSeq)toSeq}map(_.mkString)mkString("\n"))
f.close}}
I think there is much room for improvement...
[Edit] Yes, it is:
object G{def main(a:Array[String]){var l=io.Source.fromFile(new java.io.File(a(0))).mkString
val f=new java.io.FileWriter("out.txt")
var i=a(1).toInt
while(i>0){l=l.zipWithIndex.map{case(c,n)=>if(c=='\n')'\n'else{val s=Seq(-83,-82,-81,-1,1,81,82,83).map(_+n).filter(k=>k>=0&k
[Edit] And I have the feeling there is still more to squeeze out...
object G{def main(a:Array[String]){val f=new java.io.FileWriter("out.txt")
f.write(((1 to a(1).toInt):\(io.Source.fromFile(new java.io.File(a(0))).mkString)){(_,m)=>m.zipWithIndex.map{case(c,n)=>
val s=Seq(-83,-82,-81,-1,1,81,82,83)count(k=>k+n>=0&k+n
