X11 forwarding fails when the remote disk is full, or when the .Xauthority file otherwise cannot be written. There is no warning that this has happened, and the connection works, apart from that X11 apps refuse to start as they are not xauthed. It would be great if ssh could complain loudly when it was not able to set up x authentication. Thanks for all your hard work.
It is xauth's responsibility to log errors on failure. The standard xorg distribution one certainly does (try "chown root.wheel .Xauthority") and these are visible via the SSH channel.
Mass update RESOLVED->CLOSED after release of openssh-5.1