FileX is currently a file pointer, not the context of X.txt. To copy everything from X.txt to Y.txt, you will need to use FileX.read() to write the read content of FileX:

FileY.write(FileX.read())

Perhaps you should also look into using a with statement,

with open("X.txt","r") as FileX, open("Y.txt","w") as FileY:
    FileY.write(FileX.read())
# the files will close automatically

And also as suggested by a comment, you should use the shutil module for copying files and/or directories,

import shutil
shutil.copy('X.txt', 'T.txt')
# use shutil.copy2 if you want to make an identical copy preserving all metadata

1. You don't need the line output.close(), the with-block already closes the file for you.

2. Your indentation is wrong. It should be

with open("output.txt", "w") as output:
    x = 1
    while x < len(reccomendlist):
        output.write("User-ID",x,': ', "Movie-ID",reccomendlist[x][0],', ',"Movie-ID",reccomendlist[x][1],', ',"Movie-ID",reccomendlist[x][2],', ',"Movie-ID",reccomendlist[x][3],', ',"Movie-ID",reccomendlist[x][4], sep = '')
        x += 1

3. You can iterate over reccomendlist by doing

for x, element in enumerate(reccomendlist):
    element

instead of

x = 1
while x < len(reccomendlist):
    element = reccomendlist[x]
    x += 1

4. You can't add the sep parameter to write, this is a print parameter. Use print with the file parameter:

for x, element in enumerate(reccomendlist):
    print("User-ID",x,': ', "Movie-ID",element[0],', ',"Movie-ID",element[1],', ',"Movie-ID",element[2],', ',"Movie-ID",element[3],', ',"Movie-ID",element[4], sep = '', file=output)

Depending of your Python version, it can be even more readable:

for x, row in enumerate(reccomendlist):
    print(f"User-ID{x}", end=': ', file=output)
    print(', '.join(f"Movie-ID{element}" for element in row), file=output)

The io module is a fairly new python module (introduced in Python 2.6) that makes working with unicode files easier. Its documentation is at: http://docs.python.org/library/io.html

If you just want to be writing bytes (Python 2's "str" type) as opposed to text (Python 2's "unicode" type), then I would recommend you either skip the io module, and just use the builtin "open" function, which gives a file object that deals with bytes:

>>> f1 = open('test.txt','w')

Or, use 'b' in the mode string to open the file in binary mode:

>>> f1 = io.open('test.txt','wb')

Read the docs for the io module for more details: http://docs.python.org/library/io.html

The file is already closed (when the previous with block finishes), so you cannot do anything more to the file. To reopen the file, create another with statement and use the read attribute to read the file.

with open('test_output.txt', 'r') as f2:
    data = f2.read()
    print(data)