the error is in /etc/X11/60x11-localhost, or at least appears to be
however, removing the & from the last line made me able to login.
# This file is sourced by Xsession(5), not executed.
[ -x /usr/bin/xhost ] && [ -x /usr/bin/id ] &&
xhost +si:localuser:`id -un` >& /dev/null
--
xsession error
https://bugs.launchpad.net/bugs/340697
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