ok, dear ladies and gentlemen.
Yesterday I proved the dependency of locked up
X and linux kernel used.
For MDK 9.1 i did the following.
1) uninstalled all nvidia stuff
2) installed linux kernel rpm from MDK 8.2 - it was 2.4.18-6mdk
3) rebooted with the older kernel.
4) installed nvidia stuff
5) startx - WOW, works perfectly, xfconfig-4 was not touched.
The SuSE 8.1 distro i mentioned above has vmlinuz-2.4.19...
and also works _perfectly_.
So for me the problem seems to be incompatibility
between nvidia and new linux kernel (2.4.21) from mandrake at least.