There are quite a number of template engines for python: Jinja, Cheetah, Genshi etc. You won't make a mistake with any of them.

Templates are meant to be simpler than the the usual string formatting, at the cost of expressiveness. The rationale of PEP 292 compares templates to Python's %-style string formatting:

Python currently supports a string substitution syntax based on C's printf() '%' formatting character. While quite rich, %-formatting codes are also error prone, even for experienced Python programmers. A common mistake is to leave off the trailing format character, e.g. the s in %(name)s.

In addition, the rules for what can follow a % sign are fairly complex, while the usual application rarely needs such complexity. Most scripts need to do some string interpolation, but most of those use simple "stringification" formats, i.e. %s or %(name)s This form should be made simpler and less error prone.

While the new .format() improved the situation, it's still true that the format string syntax is rather complex, so the rationale still has its points.

Style

Python has a style guide called PEP8. Among many other great things, it gives guidelines about spacing that you do not follow. Indeed, your spacing seems to be quite inconsistent. You'll find tools such as pep8 to check your compliancy to PEP8 and other tools such as ``autopep8 to fix your code automatically.

It can be a good habit to move the part of your program doing things (by opposition to the part of your program defining things) behind an if __name__ == "__main__" guard.

You can also use tools such as pylint to check your code. Among other things, Python naming convention are now followed.

Don't repeat yourself / avoid magic numbers

I can see 30 in multiples places. This is usually a bad sign : if you ever want to change the value to something else, you'll have to change it in multiple places. You probably should define a constant to hold that value behind a meaningful name.

Even better, you could define a function to perform the particular behavior that you want :

Getting the length the right way

At the moment, you are keeping track of the number of rows in input_file by incrementing a variable x. It is much clearer to simply use len(intput_file). Also, x = x + 1 can simply be written : x += 1.

Taking these various comments into account, you get :

import csv

SIZE_LINE = 30


def print_with_line(s):
    print(s)
    print('-' * SIZE_LINE)


if __name__ == '__main__':

    # Open template file and pass string to 'data'.
    # Should be in HTML format except with string replace tags.
    with open('testTemplate.htm', 'r') as my_template:
        data = my_template.read()
        # print template for visual cue.
        print_with_line('Template passed:')
        print_with_line(data)

    # open CSV file that contains the data and
    # store to a dictyionary 'input_file'.
    with open('test1.csv') as csv_file:
        input_file = csv.DictReader(csv_file)
        for row in input_file:
            # create filenames for the output HTML files
            filename = 'listing' + row['stockID'] + '.htm'
            # print filenames for visual cue.
            print(filename)
            # create output HTML file.
            with open(filename, 'w') as output_file:
                # run string replace on the template file
                # using items from the data dictionary
                # HELP--> this is where I get nervous because
                # chaos will reign if the tags get mixed up
                # HELP--> is there a way to add identifiers to
                # the tags?  like %s1 =row['stockID'], %s2=row['color'] ... ???
                output_file.write(data % (
                    row['stockID'],
                    row['color'],
                    row['material'],
                    row['url']))

    # print the number of files created as a cue program has finished.
    print_with_line(str(len(input_file)) + ' files created.')

According to the docs you should take the return Value of safe_substitute

fp = open(r'D:\UserManagement\invitationTemplate.html', 'rb')        
html = Template(fp.read())
fp.close()
result = html.safe_substitute(toFirstName='jibin',fromFirstName='Vishnu')
print result