During the X11 modular upgrade my build ran into a problem where /usr/bin/xterm was depeding upon /usr/lib/libXaw.so.8, but that library was no longer on the system. So this caused Xserver to bail out when it tried to load up xterms. emerge --pretend of xterm revealed that sys-apps/utempter was blocking sys-libs/libutempter and so xterm could not be emerged. After unmerging utempter, I was able to merge xterm and now things are working. The (possible) BUG is this --> I think there might be some depedancy problem with the new modular X ebuilds that enabled this problem to occur in the first place?
*** This bug has been marked as a duplicate of 136664 ***