This means the LOCAL system isn't accepting connections from
the REMOTE system due to permissions errors. See the
Remote X Apps Mini-HOWTO for details on these issues.
As a simple trouble-shooting measure, try running a simple X app
like xclock on REMOTE and have it display on the local
system without using lbxproxy:
$ xclock -display LOCAL:0
If that doesn't work, it's xhost or some other basic X
problem, not LBX.
