Originally Posted by BigNate

Just because I hate running a search and finding a user who had a similar problem, but they never posted back when they finially got it working I give you...

...I finally got some help from some folks on the ssh mailing list.

long befor I used ssh I had to manually configure my ip addresses when I set up my network b/c I couldn't get RH to accept the DHCP addressing. And when I did that I used the GUI tool and had deleted the entry localhost thinking it was the address for the eth0...it isn't, it is the address for the loopback interface.

The lo is not used during ssh because no traffic is being redirected from the server.

During X11 fwd'ng the lo is used to redirect the traffic from the server side to the client. Hence the reason I could ssh into the box but could not get X to be redireceted (kind of a simplification but)
Therefore:
$su
$vim /etc/hosts

edit first line to reflect lo address. The syntax is different than the other addresses:
127.0.0.1 localhost

Make sure you let the other addresses alone.
see: man hosts for further info

And now it works. I have no real need to do this it was a fun diversion and quite rewarding to get working. If you have more than one computer then you should give it a go, it is cool sitting on the couch and manipulating files on a remote computer!