Step 1: Understanding the block diagram.
In a generalized communication system, the block diagram typically includes four main components: the information source, transmitter, channel, and receiver. The element labelled 'X' in the diagram is located between the transmitter and the receiver.
Step 2: Identifying the role of 'X'.
The role of 'X' in the communication system is to transmit the signal from the transmitter to the receiver. This function corresponds to the "Channel" of the system, which is responsible for carrying the signal and potentially introducing noise.
Step 3: Conclusion.
Thus, the correct answer is the "Channel", corresponding to option (C).