Thanks Dean!! ^_^
I decided to go with "Blender" and I got textured models now!!
One thing I will say Anyone else who had the same problem.
The latest version of blender (2.49a at the time this was written) does not have fbx support, (I think they forgot or something)
But
I can confirm Blender v2.48 works with XNA 3.1 (it has fbx export)
Here is the download link to the old version 2.48 that you'll need
Link:
DOWNLOAD (please note this is from the official Blender website so it should be safe)
Thanks again, ^_^
Luke.