I'm also running 8.04.1 with linux-image-2.6.24-19-generic
(2.6.24-19.41) and I can confirm this problem.
By running 'while true; do date; ls -il .Xauthority ; sleep 1; done' on
both my Ubuntu client and Debian etch NFS server (running
2.6.18-6-amd64) I can see that doing a 'ssh -X third-machine'
Further testing with various kernel versions seem to confirm this bug to
be specific to NFS clients running a 2.6.24 kernel.
** Changed in: linux (Ubuntu)
Sourcepackagename: openssh = linux
Status: New = Confirmed
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ssh -X breaks Xauthority on NFS mounted home dir