I can confirm this bug on squeeze. ServerTimeout=20 suffices for me, though, which isn't too much more than the current default of 15.
If a few other people can confirm that 20-25 seconds is enough for them, would it make sense to raise the default? It took me almost an hour to figure out why kdm stopped working after a simple upgrade. james glider ~ $ uname -a Linux glider 2.6.32-5-amd64 #1 SMP Fri Sep 17 21:50:19 UTC 2010 x86_64 GNU/Linux (I found this bug through Petter Reinholdtsen's blog post which I found through Google.) James Cook
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