I have set the DISPLAY env variable by hand to <SLES10-workstation>:0.0
That will be your problem then. When you use -X, the ports are forwarded, and the return path is done via ssh. Actually having the hostname/ip for the X server will not work, as that will be going via the firewalled route.
You should not be setting the DISPLAY by hand, and should probably end up with a display variable that is something like "localhost:xx.0" - where xx is some number (I often see something between 10 and 12).