I know this post is back from 07, but just in case it helps someone else out there...
I ran into this same issue and fixed it with the following command on the host PC ( aka the PC you are connecting to ).
access control disabled, clients can connect from any host
Note: this only works per session. So if you log out from the host or reboot it, then the command will need to be reapplied. If this is a problem, maybe configure your session to run the command on login?
One other note: this also works if you need to su to another user and launch a Gui app. Example, my daughter is logged in, I want to check my email on her PC without logging her out or switching users. I go to terminal...
hope this helps,