You should not use system, as the calling window will wait on an exit code from the script that you are calling before continuing.
Try using backticks ( ` ) to run the command:
See if that will work. You should be able to do what it is you are attempting, without much hassle. If you are unable to get the command to run after the terminal is launched - check the documentation for that terminal to find the syntax of the command. I am not familiar with xterm, so I can't help there....