you are running in init 3 -- not graphical.
edit the file /etc/inittab for booting to graphical login manager. -- that means you'll need one of those. (kdm/xdm/gdm).
but lots can be done without that overhead, so to stick with runlevel 3, you can login, and use the command 'startx' to go gui. see also that you can create/edit the file ~/.xinitrc to modify your window manager -- try putting in one of the following lines: