Very simple, I logged in as 'davem' and tried to run
X which failed because of problem #4. So I ran "su"
to become root and start it by hand. It printed out
"starting xfs: " message but the colored "OK" on the right
side never happened, in fact it just printed a newline and
gave me my root shell prompt back.
Logging in on another VC freshly as root allowed it to
fixed in XFree86-188.8.131.52-37 and later, initscripts-4.01 and greater.