The technology to fabricate and assemble many concentric, nested conical foil x-ray telescopes for high-throughput, moderateresolution, spectroscopic applications promises to be a cost-effective alternative to the grinding and polishing of conventional grazing incidence Wolter Type I telescopes. The three fundamental mechanisms that degrade achievable resolution for any imaging system are diffraction, geometrical aberrations (due to residual design errors, surface figure errors, and alignment errors), and scattering due to residual optical surface irregularities. A detailed parametric analysis of the image degradation due to each of these mechanisms is presented, with particular emphasis on the assembly and alignment errors for these tightly nested conical foil x-ray telescopes. A detailed error budget tree is then developed from which assembly and alignment tolerances can be derived. This error budget tree allows systems engineering trade-offs between foil surface tolerances, assembly and alignment tolerances, and the intrinsic resolution due to diffraction and residual design errors (the conical approximation to the ideal paraboloidal and hyperboloidal surface figure). Although the Danish Space Research Institute’s XSPECT conical foil x-ray telescope design parameters were used in this study, the methodology developed is applicable to any nested array of grazing incidence x-ray telescopes.