I had been using freenx on my 12.1 server to connect to for a good while now (NX client running on another 12.1 OpenSuSE machine) and it's worked great!.....up until the latest 'zypper update' I did on the server yesterday. I noticed it did update NX packages. Now NX/freenx is broken. When trying to connect with the client, I get this:

Code:
NX> 203 NXSSH running with pid: 4682
NX> 285 Enabling check on switch command
NX> 285 Enabling skip of SSH config files
NX> 285 Setting the preferred NX options
NX> 200 Connected to address: 10.10.69.210 on port: 22
NX> 202 Authenticating user: nx
NX> 208 Using auth method: publickey
HELLO NXSERVER - Version 3.2.0-73 OS (GPL, using backend: 3.5.0)
NX> 105 hello NXCLIENT - Version 3.2.0
NX> 134 Accepted protocol: 3.2.0
NX> 105 SET SHELL_MODE SHELL
NX> 105 SET AUTH_MODE PASSWORD
NX> 105 login
NX> 101 User: htpc
NX> 102 Password: 
NX> 103 Welcome to: htpc user: htpc
NX> 105 listsession --user="htpc" --status="suspended,running" --geometry="1280x800x24+render" --type="unix-gnome"
NX> 127 Sessions list of user 'htpc' for reconnect:

Display Type             Session ID                       Options  Depth Screen         Status      Session Name
------- ---------------- -------------------------------- -------- ----- -------------- ----------- ------------------------------


NX> 148 Server capacity: not reached for user: htpc
NX> 105 startsession  --link="lan" --backingstore="1" --encryption="1" --cache="16M" --images="64M" --shmem="1" --shpix="1" --strict="0" --composite="1" --media="0" --session="HTPC" --type="unix-gnome" --geometry="1280x774" --client="linux" --keyboard="pc102/us" --screeninfo="1280x774x24+render" 

NX> 1000 NXNODE - Version 3.2.0-73 OS (GPL, using backend: 3.5.0)
NX> 700 Session id: htpc-1001-C09EBECCF14659BDE8C65AE096A2DCB9
NX> 705 Session display: 1001
NX> 703 Session type: unix-gnome
NX> 701 Proxy cookie: 58ba39b5c5ebb0bf8cb752bbb8b0331b
NX> 702 Proxy IP: 10.10.69.210
NX> 706 Agent cookie: 58ba39b5c5ebb0bf8cb752bbb8b0331b
NX> 704 Session cache: unix-gnome
NX> 707 SSL tunneling: 1
NX> 105 /usr/bin/nxserver: line 1534:  8082 Terminated              sleep $AGENT_STARTUP_TIMEOUT
NX> 596 Session startup failed.
NX> 1004 Error: NX Agent exited with exit status 1. To troubleshoot set SESSION_LOG_CLEAN=0 in node.conf and investigate "/home/htpc/.nx/F-C-htpc-1001-C09EBECCF14659BDE8C65AE096A2DCB9/session". You might also want to try: ssh -X myserver; /usr/bin/nxnode --agent to test the basic functionality. Session log follows:
Can't open /var/lib/nxserver/db/running/sessionId{C09EBECCF14659BDE8C65AE096A2DCB9}: No such file or directory.
mv: cannot stat `/var/lib/nxserver/db/running/sessionId{C09EBECCF14659BDE8C65AE096A2DCB9}': No such file or directory
NX> 1006 Session status: closed
NX> 1001 Bye.
/usr/bin/nxserver: line 565: kill: (7788) - No such process
NX> 280 Exiting on signal: 15
This is where the error is:

Code:
NX> 105 /usr/bin/nxserver: line 1534:  8082 Terminated              sleep $AGENT_STARTUP_TIMEOUT
NX> 596 Session startup failed.
NX> 1004 Error: NX Agent exited with exit status 1. To troubleshoot  set SESSION_LOG_CLEAN=0 in node.conf and investigate  "/home/htpc/.nx/F-C-htpc-1001-C09EBECCF14659BDE8C65AE096A2DCB9/session".  You might also want to try: ssh -X myserver; /usr/bin/nxnode --agent to  test the basic functionality. Session log follows:
Can't open /var/lib/nxserver/db/running/sessionId{C09EBECCF14659BDE8C65AE096A2DCB9}: No such file or directory.
mv: cannot stat `/var/lib/nxserver/db/running/sessionId{C09EBECCF14659BDE8C65AE096A2DCB9}': No such file or directory
NX> 1006 Session status: closed
NX> 1001 Bye.
/usr/bin/nxserver: line 565: kill: (7788) - No such process
NX> 280 Exiting on signal: 15
Oddly, when running "nxsetup --test" on the server, it passes fine.

I can't figure this out! I have removed and reinstalled freenx, configured it with custom keys and using the default nomachine key. The client does authenticate fine. The problem comes when it is starting the session after it authenticates (right before the X window is supposed to pop up) and it fails.

Any ideas?

Thank you in advance.