Hi, I've encountered the same issue. I was able to track the problem down to /dev/pts directory. My quick and dirty workaround is to rm -rf /dev/pts, and ln -s /dev.ro/pts /dev/. After this is done, I can ssh into the box, and run xterm.
Hope this helps. Yifang -- To UNSUBSCRIBE, email to [EMAIL PROTECTED] with a subject of "unsubscribe". Trouble? Contact [EMAIL PROTECTED]