Bought a used Xterra 2001 (100,000 miles), working fine for first two months but after a long trip it started stuttering sometimes at around 2500 revs, specially when hot. The engine also went dead a few times while waiting in traffic light. In Advance Auto they said it was misfiring, knock sensor, recommended to change it. Mechanic on the other hand said it the distributor wasnt working properly. Bought one and replaced it my self thou I havent done the timing (dont know how to do it). When I took off the older one it was covered by oil and metal particles on the bottom. (I think since it was covered with particles It wasnt rotating adequately) The engine starts perfect but now I have stuttering on idle, low revs, could it be because of the timing?

Yes. First off Welcome, You were right to replace the distributor and you will need to adjust the ignition timing. It is fairly simple but you'll need access to a timing light. You can pick up an uber cheap model here or probably get a loaner from a parts store.

Good How-to on setting ignition timing (Check the label under the hood for the spec timing and idle speed values)

Or you can search this site for more info. Tip: I'd use the search term 'BTDC' instead of 'timing' to skip over the hundreds of thousands of timing belt posts. Also, don't know if you've already done them or not but those spark plugs are going to be ripe for changing at that mileage and worn plugs can have quite an impact in idle. Lastly, use the search tool again to learn all about the knock sensors used on the trucks, their inevitable failure, what a PITA they are to change and that they really don't do anything on the normally aspirated models so most of us just leave them broke (myself included)

-Saturday

Yes it could