There's nothing wrong with that config file, at least not that I can see.
About your comment in there with VideoRam, that's not even relevant. The nVidia drivers don't even honor that setting if you uncomment it, so don't worry about it. Leave it commented out.
execve failed for /etc/X11/X (errno 2)
errno == 2 means (check /usr/include/asm/errno.h) the file that you're trying to execute doesn't exist.
Are you sure
you have X installed? If you are sure, post the first 30-40 lines of your startx script (should be /usr/X11R6/bin/startx). At the top, there will be a list of files that it looks for for settings like that. Mine lists (among others) $HOME/.xserverrc, and /etc/X11/xinit/xserverrc, with the fallback /usr/X11R6/bin/X. If either of the xserverrc files exist, post them as well. If not, make sure the fallback "defaultserver" exists, because that's what's trying to execute /etc/X11/X (which doesn't exist).