I have developed my entire site, and now i'm reading some books and different online articles that say my site should be validated in W3C. Is there software that will convert my pages or fix validation problems automatically for me?
Let's make one thing clear. The W3C don't give a crap about search engines. They strictly write their standards for the sake of developers (to give developers a consistent toolbox to use) and for the sake of human visitors. The standards about which you are speaking here are those created for developers. They were never created for the sake of SEs, and SE could largely care less about them.
Now, the WAI (Web Accessibility Initiative) WCAG (Web Content Accessibility Guidelines) documentation is what the W3C released for the sake of human visitors, to make the browsing experience as open, accessible and universal as possible. This documentation does affect search engine performance, because the whole point of search engine algorithms is to attempt to think like a human, to select sites that are the best fit for certain keywords the same way a human would naturally conclude those sites are the best search results. Therefore, it benefits you to learn and understand Web accesibility, because this naturally assists with search engine accessibility. It's not the holy grail - it's not the formula to search engine success by any means. But a well optimized site is optimized at both the engineering level and the content level, and taking WCAG documentation into consideration will assist you greatly with the engineering portion of SEO.
However, in order to get to that level, you must first be able to handle the baseline requirement of using proper markup, as prescribed by the W3C. First you use the right tools (W3C) and then you learn how to use the right tools properly (WCAG). Valid code does not equal good code! It just means it is recognizable by some standard.
If all you intend to do is to validate your code, you're doing very little that will benefit your site in terms of search engines. If you're going to take accessibility into consideration (proper content heirarchy and use of heading tags, good alternative text, textual alternatives for streaming or interactive media, general semantic validity), then you'll be doing something useful for search engines as well.
Try htmlTidy. There is also a mozilla plugin which has tidy module.
w3c may not be required for SEO but we generally get it done as its good practice.
But does it help SEO? No one knows. Google home page is not w3c compliant.
Matt Cutts in one of his recent videos said that the only requirement Google has is being able to crawl your site and that if you can view your entire site using Lynx you are good to go as far as Google is concerned.
While we will never know for sure about anything I think its pretty safe to mark this one down as not being of any help to rankings with the caveat expressed above.
Personally, I think validating a website is just one of the first few steps for SEO. I make it a practice every time I code a website for client as validating a website is not hard and definitely doesn't worth risking it.
Thanks for everyone's help. After playing with a few validators I've decided that I probably won't end up making any changes to my coding. I am indexed in the major search engines, so I guess I'm doing at least something right