Thanks for the tip. I have checked /var/log/nvidia-installer.log; there was only one symlink which wasn't deleted. I deleted symlink, reinstalled the driver and this time no problems.
I had a TwinView working, did several tweaks to the xorg.conf created by the nvidia-xconfig, restarting X after each individual change without a glitch.
When I restart the PC the problem reapears:
1. first i get an error: - not starting X display manager (xdm); it is not the default display manager. Now I'm stuck with console login.
2. I login as a root, type in xdm commmand; screen flickers a few times and than it returns to prompt. No xdm.log is created.
3. if I type in startx command I get the same error masage as mentioned in original post.