The real X became a Cyber elf and ran out of power after the events of Z3, returning to Cyberspace permanently.
You're making a vital misconception here. When X used too much energy, he felt his own consciousness melt away into the electronic abyss, he was dying. Had X died there, he would not have been a Cyber-Elf, he would have just been inanimate data. However, X fought back. With his will, he desired to continue living with everyone else and thus barely avoided death.
X became much like Phantom, a ghost stuck in the interim between life and death. That Phantom witnessed Vile's Incident in this state and in Cyberspace learned all truths. That Phantom can also be found in ZERO3 as a mysterious Cyber-Elf in the Resistance Base that calls out to Zero to do battle. That is the limit of Phantom's capabilities in the real world. In a very similar manner Elpis can be found at the Resistance Base as well, seemingly contemplating his sins of the past. X exists in that exact same manner, a Cyber Elf that can no longer interact with people in the same way he did before. Likewise, even Harpuia, Leviathan, Fefnir and Zero exist in this exact same state. Not quite alive, not quite dead, witnessing the changing of the world until their powers are once again called upon to save the world.
Ciel herself had nothing of the original duo to use when she made Biometal X and Biometal Z, as noted in game, so she had to use Biometal/Ragnarok Core W for the process. She may have programmed the two Biometals as close as possible to X and Zeros personalities, but they don't have the "heart" or "soul" of the originals as you put it.
Damn near close considering how much time she spent with Zero, but still not the same as the original.
I think you're misunderstanding what the First Commander was getting at.
Model V is that soul of that man contained in the fragments of Ragnarok. This statement on Model V defines the very concept of a Livemetal; a metal that has life.
The other Livemetal were created using the data she obtained on the legendary heroes. The "data of Vile" was switched with the "data of legendary heroes." The data of Vile inside of the Livemetal is his very soul.
As Prairie stated, Livemetal are fragments that contain the consciousness of legendary heroes. Their consciousness is never stated to be copied, it's instead explicitly said that it's the exact same consciousness of those that fought centuries ago.
A Repiroid's consciousness is nothing else than a Repliroid's personality program. When discussing Omega's personality program IntiCreated defined "personality program" as "Cyber-Elf". A Cyber-Elf has also been defined as a soul. Other definitions include "sentient program with created with pure energy in the image of elves" and "program life object." Being programs, they can also be seen as "data obtained from..."
Elpis, X, Phantom have all been described in the above manner, and we have reason to suspect the same applies to many others. Six in particular of those exist in current time as Livemetal. If you don't quite get this just yet, those Livemetal are also said to have abilities like Cyber-Elves.
In other words, all of this applies to that which is inside of the Livemetal. Data, consciousness, personality program, Cyber-Elf, soul. All of those words are synonymous. The Legendary Heroes that fought "that man" centuries ago have all transcended death itself. Those legendary heroes did indeed witness the changing of the world till the day came that their powers were called upon.
Using Model V at the base, the First Commander succeeded in giving them a new material form as Livemetal. However, she did not understand all of Model V. The part she did not understand was the Livemetal's unique features; the transformation into a Rockman that is limited to a chosen one. Therefore there's the innate danger that the chosen one who uses the Livemetal can also use Model V.
I honestly don't see where you would get the idea of "copies" from. The entire ZERO-series rams into one's skull that the original is superior to a copy. The original body is stronger than the copy body and the original heart is stronger than the copy heart. In the clash of original body vs original heart, the heart came out on top. There's no way to copy X and Zero, you'd just end up with another Copy-X or Omega.