If you have the resources to burn and like X, KDE is a wonderful integrate
package.

I got startx -- -bpp 16 working just fine.  Then I tried setting up xdm.
I have noticed that if I comment out the first section of Xsession, the
xdm starts and I can login fine.  But If I don't comment out the first
section of Xsession, then xdm gets stuck in a loop, even if I login with
the right username and password.  Here are the lines I commented out with 
the "#":

#!/bin/sh # $XConsortium: Xsession /main/10 1995/12/18 18:21:28 gildea $
# redirect errors to a file in user's home directory if we can 
#for errfile in "$HOME/.xsession-errors" "${TMPDIR-/tmp}/xses-$USER" \
    "/tmp/xses- $USER" 
#do 
# if ( cp /dev/null "$errfile" 2> /dev/null ) 
#then 
# chmod 600 "$errfile"  
# exec > "$errfile" 2>&1 
# break 
# fi 
#done
[... rest of script was cut ...]

On another side note, has anyone on NetBSD gotten kdm to propper login a
user?  I started kdm -nodaemon and got the xlogin screen, and after login
in, it flashes the grey screen and it comes back to the original kdm
xlogin screen.