XTerm has changed to use colour for bold. This is unreadable in reverse video mode, preferred by most of my users. The fix is to comment the line *VT100*colorBDMode: on in /etc/X11/app-defaults/XTerm
We should turn this off by default, and keel-haul whoever thought it would be a bright idea upstream.
While we're at it, the ctrl-LMB menu has 'BS/DEL' on by default, which breaks telnet line mode applications. Fortunately I only use one at the moment. I must work out which resource this is and turn it off by default (as in all other distros?).
Which version of xfree?
x11-terms/xterm uses XTerm-color and XTerm, so this can be configured.