X-ray diffraction, possibly time-resolved during growth or annealing, is an important technique for the investigation of polytypism in free-standing nanowires. A major advantage of the X-ray diffraction approach for adequately chosen beam conditions is its high statistical significance in comparison with transmission electron microscopy. In this manuscript the interpretation of such X-ray intensity distribution is discussed, and is shown to be non-trivial and non-unique given measurements of the [111]c or [333]c reflection of polytypic nanowires grown in the (111)c direction. In particular, the diffracted intensity distributions for several statistical distributions of the polytypes inside the nanowires are simulated and compared. As an example, polytypic GaAs nanowires are employed, grown on a Si-(111) substrate with an interplanar spacing of the Ga (or As) planes in the wurtzite arrangement that is 0.7% larger than in the zinc blende arrangement along the (111)c direction. Most importantly, ambiguities of high experimental relevance in the case of strongly fluctuating length of the defect-free polytype segments in the nanowires are demonstrated. As a consequence of these ambiguities, a large set of deviations from the widely used Markov model for the stacking sequences of the nanowires cannot be detected in the X-ray diffraction data. Thus, the results here are of high relevance for the proper interpretation of such data.