One easy way around this is just to use ssh to login with port forwarding like such:
$ ssh -X host
This will set the DISPLAY variable automatically and any X program you run will be automatically tunneled back through the ssh connection.
Otherwise we're going to need to enable it. Here's how:
1. Go to System->Administration->Login Window (or run gdmsetup as root)
2. Under the security tab uncheck "Deny TCP connections to Xserver"
3. Now we have to restart gdm which will kill our Xsession.
# kill -HUP `cat /var/run/gdm.pid`
or if you prefer to edit /etc/gdm.conf by hand, make sure there are no overriding settings in /etc/gdm.conf-custom. Under the security section change DisallowTCP to false.
Unfortunately we cannot use gdmflexiserver, only a gdm restart will work.
