Garry,

By use of the term FieldType1, I am assuming that you are using a
protected form and the field bookmark is "FieldType1"

Now you need an IF field a Ref field and a couple of  IncludeText
fields.  Both are described in the help file.

Your end result should look something this:

{ IF {REF FieldType1} = "X""{IncludeText "C:\\Some Text"}"{IncludeText
"C:\\Some Other Text"}}

Enter a conditional stement by selecting "If...Then...Else" from the Insert
Word Field button in the Merge toolbar.