default location for xauth in sshd_config has changed
This changed in version 3.4 and 3.5. I tried to ssh with X forwarding both to my old box darner after upgrading kernel and world, and to zyxomma with a fresh 3.4 install. ssh -v showed that it did not find xauth. A commented-out line in sshd_config implies that the default is /usr/pkg/bin/xauth, which is where xauth is. I uncommented the line, restarted sshd, and successfully got an ssh connection with X forwarding.