VAX VMS Systems are not Unix systems and use a different method to log in. A terminal emulator will be required to set the DISPLAY before bringing the X applications to the Windows machine.
Start X-Win32 and let it sit idle. Start a terminal emulator
Connect to your host via telnet or Rlogin with your terminal emulator. Enter your username and password, you should be given a prompt when connected. Now type the following commands at the prompt:
$ set display/create/transport=tcpip/node=(your ip address)/server=0
$ create /terminal/detach
This started the DECterm.
If you want to run the full desktop, run the command
$ run sys$system:decw$session.exe