A lot of tools have changed in the range of Fedora 3 up to 7 (including the switch to Xorg). Upgrades usually keep configuration files intact, and it is possible that some of these configuration formats are not what FC10 expects. Upgrading Fedora version by version would have take longer, but is known to work correctly in most cases.
Most files and directories in /var are supposed to be owned by root. Maybe you should remove the current X installation and install it from scratch. This can be tough to remove, though, due to the many dependencies.