I recently had trouble getting X running after upgrading to NetBSD 1.6
on the i386 platform.  This port uses XFree 4.2.0.  By deleting the old
.Xauthority files I can get X to run using startx but it can't generate
a new .Xauthority file because xauth thinks :0. is a "bad" display. 
Because XFree 4 can't generate a valid .Xauthority, I can't use xdm. 
According to the man page on xauth,

# xauth generate ${DISPLAY} .

_should_ generate ${HOME}/.Xauthority.  Instead, it yields an error
message stating that ":0." is a bad display.  If I use localhost:0. for
the display, it will create the file but I would have to alter the X
start-up scripts to use that instead of :0.  According to the X docs,
:0. should be a valid display for local X servers.

Is this a bug or a feature?  I found a message in the mail archives from
about a year ago describing this problem.  No resolution of the problem
followed.  I mailed the author of that message asking about a resolution
but received no response.

Does anyone hav an answer to this?  I tried rebuilding X from -current
but the problem persists.  Thanks

David