Everyone knows Head Smash is a strong move because of its 150 power and 80 accuracy but the user takes terrible damage. Stone Edge has a high critical hit-ratio with a base power of 100 power and 80 accuracy so which move should I use on Steelix?
Steelix isn't a rock type, so both of them don't benefit from STAB. I would go with Head Smash since it already is an extremely powerful move (no need for STAB) and it's rock head ability prevents recoil damage, so it is preferable to go with Head Smash if this Steelix has rock head, but if not go with Stone Edge since you don't want your steelix to suffer from Head Smash's recoil. It also depends on what you want to achieve with this steelix; do you want to battle simple npc's ,battle tower npc's or real players online?
One hundred percent take Head Smash. With its ability, it can avoid recoil damage all together. As you said, it is an insanely powerful move at 150 base power. Head smash is just more powerful in general, so I wouldn't go with stone edge.
Steelix loses its Rock type upon evolution, But Rock does provide coverage against Fire types. It really depends on its ability. If it has Rock Head, use Head Smash, since it is much more powerful. If not, give it Stone Edge unless you want Steelix to suffer major recoil.