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Hello,

>> is i still there if you run the Xserver as root?
>
> sorry forgot to write that one. yes error is still
> there if I'm trying to run Xmacppc as a root or dummy
> same problem presists
That's strange. The ttyaction stuff you did only fixes permissions, 
root doesn't need that.

> by the way if xfree86config is not for Xmacppc then
> what is the configuration file for it?
It doesn't need one.

Could you paste your dmesg output? Xmacppc should find keyboard and 
mouse when the kernel finds them. Did you check if all the device 
entries exist? In doubt run ./MAKEDEV all in /dev and try again.

have fun
Michael
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