The X8 seems to be one of the cheapest smartphones, which is officially supported by CyanogenMod, so I can get an unrestricted and up to date Android. Well, at least in theory up to date. So far I only have Gingerbread, but no Ice Cream Sandwich.

1. Get Root Access

There is flashtool (currently version 0.6.9.1) for Windows and Linux, which provides a nice and easy GUI.

The phone must be in development mode, otherwise flashtool will complain "be sure you are not in MTP mode". Do that in Settings-Application-Development.

Click the "Root" button in Flashtool. It will try various exploits and then reboots. Now you have root permissions.

2. Get CyanogenMod Image

The official stable and nightly build did not work for me, so I ended up with the GingerDX distribution version 025. Download them and copy the zip file to your phone's SD card.

3. Backup

Always a good idea. Flashtool can install xRecovery via the "Recovery Installer" button. This is a kind of a boot loader with backup capabilities. Reboot your phone and press the Back button repeatedly when "Sony Ericsson" is displayed.

The menu is controlled via audio up and down. The Home button enters an option and the Back button leaves it. Use "Back up and restore" followed by "Back up", to create a system backup of the currently working system.

If the image you copied did not work or something went wrong, you can restore from the backup.

4. Clean System

Now apply "Factory Reset (full wipe)" to clean up the system. In some instance old user data seems to trigger bugs.

5. Install New System

Now "Install custom zip"-"choose custom zip from sdcard" and select the image file you copied. In my case that was "update-GingerDX-v025.zip". After the reboot, my new Android was working.

Thanks chromloop, I basically followed your guide, but kuyaDROID did not work for me.