Confused about goals

So last month I weighed in at 260 for the past week and a half I been stuck at 251. This is causing some confusion as to what I should be doing. My goal is to loose weight and build muscle since I am flabby everywhere except my legs. I currently wear a size 42 so for now my goal is getting to a 36.

A friend of mine says I should work on building muscle and the weight will just shed on its own. But another says I should just do cardio and loose the fat then begin weight training. Both of these guys are so weak they couldnt change a flat tire if they had to, so I cant really trust what they say. What should I do? I am extremely motivated but I am starting to feel my time at the gym is time I am now just wasting.

Do both.  Physical resistance exercises will help you a lot more than you think, throw some cardio on your off days and a little after your workouts.  Plenty of info on this site to learn what you should do and help you better understand how your body works.

http://www.discussbodybuilding.com/Seos-Log-2008-m442008.aspx

Alright man Ill keep reading, thanks

Normaly you try to "cut" (caloric deficit/consume less calories than you burn) or "bulk" ( caloric surplus/consume more calories than you burn) and when cutting the goal is to lose fat, when bulking the goal is to build muscle. But I think you could manage at your size/experience to lose fat and gain some muscle..

Goals by end of 2009:
Bench 205
Squat 255 ATG
Squat Clean 185

"There is no elevator to success, you must take the stairs."

The more muscle you have, the greater the calorific maintenance burn, so bulking can help you burn fat.  Both your friends are right, but you can't out train a bad diet, so if cutting fat is your aim then you will need to tailor your diet at some point to make that easier.