I recently setup a CentOS 5.5 server and had some trouble with X forwarding / tunneling X over SSH. During the installation I chose to do a base with KVM only (kickstart) and afterwards tried to run virt-manager over ssh (-X) but it would fail miserably. I tried to install the system-config-* tools to check if it was a python issue or just a display error.Every time I tried to load any of the system-config-* tool I would get the following message:

Unable to initialize graphical environment. Most likely cause of failure is that the tool was not run using a graphical environment. Please either start your graphical user interface or set your DISPLAY variable. Caught exception: could not open display

After some googling I found that the issue could be fixed by installing the following packages:

xorg-x11-xauth
xorg-x11-fonts*

So a yum -y install xorg-x11-xauth xorg-x11-fonts* , close the session, log back in and I see the message

/usr/bin/xauth:  creating new authority file /root/.Xauthority

After that any GUI tool runs just fine.