1. Yes, runlevel 3 is fine. You absolutely don't need to have runlevel 5 (your GUI desktop) running in order to have (another, different GUI desktop) running with VncServer.
2. Q: Have you tried running the vncviewer client locally, on the same PC as your VNC server? That would be a good test...
3. Q: Have you looked at the VNC error log
4. Q: Exactly how are you trying to connect?
<= Will use port 5902, to connect to display #2
Remember, each "display" corresponds to a port:
0 = 5900
1 = 5901
2 = 5902
'Hope that helps