I'll have an answer up for this fairly soon.

Thank you

An explanation can be found here

http://tafsir.com/default.asp?sid=9&tid=20980

My arabic isn't that good, but from what I know Qital means fighting. Surah 9 verse 29 begins with the word Qutilal. The translation reads: fight those. In which case, in verse 29 fighting relates to physical fighting.

However the importance lies in who this is aimed at and what the relevance of this ayat is. Now one of the scholar's notes states that the reason to fight is to put an end to the suzeranity of the unbelievers. Basically, what this ayat is trying to say is: you have two options: a system based on ignorance and a system based on the divine law. In this particular occasion, a muslim should fight for the system on divine law (aka Islamic law). However, the context relates to the time of the pagans (as shown in the tafsir link serene has provided). In other words, that ayat is for a specific time and place.

So it is only in refrence to fighting the Roman Empire?

This verse deals with the Jihad and it is only permitted to fight those who fight you. The verse below shows that you should fight when it is time to fight. BUT do not transgress the limits. wa laa ta'tadoo.
Fight in the way of Allah against those who fight against you, but begin not hostilities. Lo! Allah loveth not aggressors. (2:190)

Pretty much. It's not for every muslim to carry out - only to those it was revealed to initially. What we can take from the ayat is the principle; divine law is better that the other laws. But that's really as far as that ayat is relevant to the muslims of today (in terms of what we have to take from it) - the rest is important but not relevant to what muslims are to follow.

Alternatively, just use the tafsir link.

A detailed answer can be found here.

Uh, the Prophet (peace be upon him) didn't fight Rome much, if at all...

From my knowledge I can't think of any Muslim country that was in military conflict with any part of the shattered Roman Empire except for the Turks and Byzantines. Which is what we are talking about here, not the true Roman Empire.

The word 'Byzantine' is a modern invention, they never called themselves that, they were known as Romans to the people of the time. When Islamic sources talk about Romans, the usually mean Byzantines, rather than the western Empire, which was defunct long before Islam.

then what is Surah 9:29 talking about?

Is it a universal imperative to fight non-Muslims untill they pay the tax?

When Ameer ul Mu'mineen declares a Jihad, then it is permissible to fight. You should fight those who fight you. But if they seize then you should seize fighting as well. If they ask for terms we should accept.
"Fight in the way of Allah against those who fight against you, but begin not hostilities. Lo! Allah loveth not aggressors." (2:190)