On certain systems, no X clients can be launched at all. This is due to a third party application locking up which in turn locks up X-Win32.
To test if you are seeing this issue, try to run the fluxbox window manager installed with X-Win32. Click here for instructions. If you do not see a taskbar showing up at the bottom of the single window, something is locking up X-Win32 (see image attachment for a visual explanation of what you should see).
We have found certain network speedup utilities from Sprint or AT&T cause the lockup. This is due to a bug in bmnet.dll from the company Bytemobile
The solution is to remove the bmnet.dll entry from the layered service provider list (LSP) with http://www.cexx.org/lspfix.htm.
Microsoft has a similar issue with bmnet.dll which is documented here