This is coming from this file:
http://bazaar.launchpad.net/~ubuntu-branches/ubuntu/lucid/gdm/lucid/annotate/head%3A/debian/xterm.desktop
Indeed, it needs to be marked for translation.
** Changed in: ubuntu-translations
Status: New => Triaged
** Changed in: gnome-session (Ubuntu)
Status: New => Invalid
** Also affects: gdm (Ubuntu)
Importance: Undecided
Status: New
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Missing translations for "xterm failsafe session"
https://bugs.launchpad.net/bugs/542068
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