Cygwin help: Xlib: connection to “ip:0.0” refused by server

From the Cygwin web site:

How can I make my own portable Cygwin on CD?

While some users have successfully done this, for example Indiana University's XLiveCD http://xlivecd.indiana.edu/, there is no easy way to do it. Full instructions for constructing a porttable Cygwin on CD by hand can be found on the mailing list at http://www.cygwin.com/ml/cygwin/2003-07/msg01117.html. (Thanks to fergus at bonhard dot uklinux dot net for these instructions.)

I finally got it working:

I was trying to get better debug output then ssh -vvv, so I tried running

/usr/sbin/sshd -d

to catch the output on screen. To my surprise, when I ran sshd like that (not as a service as I usually would with net start sshd), I could log in as any user alright.

That led me to believe that the problem lied in the way the service was set up. So I deleted the service and ran the config script again. Bam! It's done!

cygrunsrv -R sshd
ssh-host-config
# it's fixed!

Edit: It looks like that the reason is that the privilege separation user cannot be disabled in Windows. It used to be OK for me to disable that privilege separation user and still get it to work, but oh well.