You can't use Nikon lenses on that. But some other brands (like Sigma for excample) could work. And for the nature of the lens it depends what you want to do with it. Just for snapshotting I would go for the variable focal lenght.
Got a few questions for those who own or have used the Canon Rebel XT:
Can the Rebel XT use other camera lens like Nikon's?
Is it required to use Canon's own lenses to take full feature of the Rebel XT or does not matter what lens is used?
Better to go with a zoom which has fewer f-stop range -or- single (ie 28mm only or 50 mm only) for greater f-stop range?
What lens goes best with the Rebel XT?
to answer your questions:
Yes, you can use a nikkor lens or one with a nikon lens by using a lens mount, but I don't reccomend it. First, you lose autofocus, and second, the apeture it set digitally on most lens now, so you can get problems their.
The Rebel XT (aka 350d) is compatible with all EF and EF-s lenses that canon offers, which is well over 60.
but don't think that you have to use canon brand lenses.
Tamron, sigma, and tokina all make lens that use the EF and EF-s lens mount. As long as you have the right lens mount (ef or efs) the lens with work 100% with your rebel.
Only you know what you shoot. If you just want an all around lens that will give you a choice of focal lengths, you should check out lens like the Tamron 18-200mm, (http://www.amazon.com/Tamron-Autofocus-18-200mm-3-5-6-3...)
if you are using your kit lens (which is probobly the 18-55mm 3.5-4.5, right?) and you want a longer zoom lens, get that. if you are dissapointed in the quality of the pictures, invest in a quality street zoom, telephoto, or wide angle, depending on what you shoot most. if you shoot a lot in low light, I would reccomend the canon 50mm f1.4, or budget wise, the 50mm f1.8II. Just think about what YOU shoot, Your Budget, and how serious you are about photography and your camera.
I own the digital rebel (300d), and after using the kit lens and a cheap 70-200 canon lens, I finally made a jump and bought a 70-200mm f.4L. I was shocked at how much the lens makes a difference. It costs about 500$, but was worth it because of what I was using it for. Lenses make all the difference in the images.
Hopes this helps.
My advice is to read about different lens, and talk to people at camera stores, read reviews on lens, and then make a purchase.