This reply might be extremely late and not benefit the person who started this thread. But, just in case there are any other people who stumble upon this thread, here is a detailed explanation.
Copying from xterm to another application :
When you highlight something in xterm, it gets copied to your primary buffer. The only way to paste something from your primary buffer is to click your scroll (on your scroll mouse) or click your left and right keys of your mouse simultaneously.
ctrl-v pastes from your clipboard. xterm does not recognise the clipboard and nor does it recognise the keys ctrl-v. Hence, the conventional copy-paste method does not work.
I would recommend you try the following -
(a) Open xterm and select (highlight) the text you want to copy
(b) Go to the application where you want to paste the text. Hover your mouse above the place where you want to paste.
(c) Click your scroll button on your mouse.
One should be very careful about the primary buffer. Being very volatile, any higlighting will erase the buffer of its previous contents. For instance, an alt-d (in firefox) will replace the contents of your primary buffer with the url of your opened tab.
Copying from another application to xterm :
Most other applications, the process of copying to the clipboard results in copying to the primary buffer as well. For instance, when we wish to copy (for instance) the url opened in a certain tab, we do the following -
(a) Open the tab and highlight the url (a ctrl-a or alt-d, etc)
(b) Click ctrl-c to copy the string
Here, in step (a), we write to the primary buffer and in step (b), we write to the clipboard.
Thus, when we wish to copy some text and paste it in xterm, all we need to do is select the text (highlight it) and move your cursor to xterm and click the scroll button.
(Note : We don't need to do a ctrl-c!)
If you wish to fiddle around a little more with your xterm keybindings, etc., this article might help you -
It certainly helped me a lot!