X is unable to connect to xfs when started by the /etc/init.d/xfs . I had to remove "-port -1" from the xfs command. According to Arcady Genkin the "-port -1" option is to prevent listening thru TCP but this should be done in the configuration file, i.e., adding no-listen = tcp to /etc/X11/fs/config .
Okay, I've moved the port specification from the startup script into the config file. Thanks for the report.