Wsrtjtyk

grid = [[' --- --- --- '], ['| 1 | 2 | 3 |'],

        [' --- --- --- '], ['| 4 | 5 | 6 |'],

        [' --- --- --- '], ['| 7 | 8 | 9 |'],

        [' --- --- --- ']] 



def board():

    for i in grid:

        print(''.join(i) 



def player():

    x = 0

    y = 0

    player1 = input("Enter Player1 move : ")

    for i in grid:

        for j in i:

            if j == player1:

                grid[1][1] = 'X'

    board()



player()

Output:

 --- --- --- 

| 1 | 2 | 3 |

 --- --- --- 

| 4 | 5 | 6 |

 --- --- --- 

| 7 | 8 | 9 |

 --- --- --- 

Though the code is not yet complete,my problem is, the numbers in the grid doesn't change when it should be changed according to the user input..What am i doing wrong!? :(

On a second thought I saw you were anyway comparing string with strings, so the problem here is that your j variable was never assuming all the numeric values in your grid (i.e. 1, 2, 3, etc...).
A better approach would be to define your grid in a different way and change the way you print it.

You first define the pattern you want to print at the beginning and at the end of your grid. Then you iterate over the rows of your grid and create the string to print:

startEnd = ' --- --- --- '

grid2 = [['1', '2', '3'],['4', '5', '6'],['7', '8', '9']]



def board():

    print (startEnd)

    for row in grid2:

        s = '| {0} | {1} | {2} |'.format(row[0], row[1], row[2])

        print(s)        

    print (startEnd)



def player():

    x = 0

    y = 0

    player1 = raw_input("Enter Player1 move : ")

    for i in grid2:

        for j in i:

            if j == player1:

                grid2[1][1] = 'X'

    board()



player()

Output is:

 --- --- ---

| 1 | 2 | 3 |

| 4 | X | 6 |

| 7 | 8 | 9 |

 --- --- ---

There are several bugs to your code - see inline comments:

grid = [[' --- --- --- '], ['| 1 | 2 | 3 |'],

        [' --- --- --- '], ['| 4 | 5 | 6 |'],

        [' --- --- --- '], ['| 7 | 8 | 9 |'],

        [' --- --- --- ']] 



def player():

    x = 0                          # not used

    y = 0                          # not used

    player1 = input("Enter Player1 move : ")

    for i in grid:                 # each i is a list containing 1 string

        for j in i:                # each j is one string

            if j == player1:       # only ever true if playerinput is ' --- --- --- '

                                   # or '| 1 | 2 | 3 |' or '| 4 | 5 | & |' or ....

                grid[1][1] = 'X'   # never hit.

You should split your code into smaller and easier to understand parts:

def freeSpace(l,pos):

    """Returns True if l[pos] is inside the list and currently of type int - else False."""

    return (0 <= pos < len(l))  and isinstance(l[pos],int)



def setPlayer(l,player,pos):

    """Checks if l[pos] is valid to be set to a players 'X' or 'O' string. 

    If, set it and return True, else return False."""

    if freeSpace(l,pos):

        l[pos] = player

        return True



    return False



def printList(l):

    """Pretty prints a list of 9 items in a grid with some decor around it."""

    print("n --- --- --- ")

    for row in (l[i:i + 3] for i in range(0,9,3)):

        print("|",end="")

        for e in row:

            print("{:^3}|".format(e),end="")

        print("n --- --- --- ")



def no_win(l):

    # TODO - check for win, return False and a win message mayhap

    return True

Main game:

# prepare field with integers - its easier to hold your 9 fields in a 1dim list

# and do the "comlicated" stuff in printList

tic_tac_toe = list(range(1,10))



# no players turn

player = ""

ok = True



# until all fields

while any(i in range(1,10) for i in tic_tac_toe) and no_win(tic_tac_toe):

    printList(tic_tac_toe)



    # last turn was ok, switch players (X starts if player = "")

    if ok:

        player = "X" if player != "X" else "O"

        print("Your turn: ", player)

    else: 

        # how hard can it be ...

        print("Wrong move - try again: ", player)



    # you could move this also in a method .. see 

    # https://stackoverflow.com/questions/23294658/asking-the-user-for-input-until

    try:

        k = input("Which position? ")

        k = int(k)-1

        ok = setPlayer(tic_tac_toe, player, k)

    except ValueError:

        ok = False

Output:

 --- --- ---

| 1 | 2 | 3 |

 --- --- ---

| 4 | 5 | 6 |

 --- --- ---

| 7 | 8 | 9 |

 --- --- ---

Your turn:  X

Which position? Applepie



 --- --- ---

| 1 | 2 | 3 |

 --- --- ---

| 4 | 5 | 6 |

 --- --- ---

| 7 | 8 | 9 |

 --- --- ---

Wrong move - try again:  X

Which position? 99



 --- --- ---

| 1 | 2 | 3 |

 --- --- ---

| 4 | 5 | 6 |

 --- --- ---

| 7 | 8 | 9 |

 --- --- ---

Wrong move - try again:  X

Which position? 1



 --- --- ---

| X | 2 | 3 |

 --- --- ---

| 4 | 5 | 6 |

 --- --- ---

| 7 | 8 | 9 |

 --- --- ---

Your turn:  O

Which position? 1



 --- --- ---

| X | 2 | 3 |

 --- --- ---

| 4 | 5 | 6 |

 --- --- ---

| 7 | 8 | 9 |

 --- --- ---

Wrong move - try again:  O

Which position? 5



 --- --- ---

| X | 2 | 3 |

 --- --- ---

| 4 | O | 6 |

 --- --- ---

| 7 | 8 | 9 |

 --- --- ---

Your turn:  X

Which position?  # etc.