/etc/rc.d/init.d/xfs runs mkfontdir when needed.
It chmods only +r on fonts.dir and encodings.dir not at all.
Then it runs xfs -droppriv, which cannot read the files.
Fix: chmod a+r fonts.dir encodings.dir
Also, the error message from xfs says that there is a bad font. It should
be saying that it is unable to open a file and which file that is.
The result of this bug is that gdm keeps dying and restarting every 2
seconds, as there is no xfs running. Quite nasty and probably difficult
to fix for a beginner.
Thanks, fixed in rawhide. Will appear shortly.