Apple is unclear about whether a 128K will officially support MacTerminal 2.2. Only that version 2.0 & 2.1 are incompatible with System 4.1. v. 2.2 is compatible and to use v. 4.0 or earlier. However, the 128K will not support System 4.0 and up. So I know that the 128K will support up to v. 2.1. EDIT: This Apple TIL seems to indicate that the 128K will support v. 2.2, but NOT v. 2.3. Guess I'd have to test it to be certain.
Nevertheless, I take it "MacBinary" is available in both v. 1.1 and 2.2 and otherwise the settings are the same. If so, v. 1.1 should work with XTerm as well. One question comes to mind as you are using a significantly more modern LC, running System 6 or 7? And what version of XTerm? What System on your 512K (I presume you were going from the LC to your 512K) – and v.2.2 on both?
I wonder if the 68K version of XTerm on your LC behaves the same as XTerm under Snow Leopard? The reason I wonder is that I'm certain I had MacTerminal set to MacBinary when I first tried to connect with XTerm from TIger using "Xmodem" protocol, though I may not have had that exact combination when I was testing. Perhaps there is an additional setting necessary in the OS X version, not required in the 68K version.
AFP under Snow Leopard
Also, I notice on my "Sharing" pane in System Prefs under Snow Leopard that the "File Sharing" service settings has an "Options" button that allows "Share files and folders using AFP" which was disabled by default. I presume you checked this and it still killed connecting to a legacy system?
