did you enable it in sysconfig/kdmrc? Like grep -i 
xdmc /etc/opt/kde3/share/config/kdm/kdmrc 

Yes, I did it manually. I've read a lot of HOWTOs found on Google regarding 
XDMCP and KDE, but no luck. Here's what is in kdmrc: 
 
[Xdmcp] 
# Whether KDM should listen to incoming XDMCP requests. 
# Default is true 
Enable=true 
# The UDP port on which KDM should listen for XDMCP requests. Do not change. 
# Default is 177 
Port=177 
# File with the private keys of X-terminals. Required for XDM authentication. 
# Default is "" 
KeyFile=/opt/kde3/share/config/kdm/kdmkeys 
# XDMCP access control file in the usual XDM-Xaccess format. 
# Default is "/opt/kde3/share/config/kdm/Xaccess" 
Xaccess=/opt/kde3/share/config/kdm/Xaccess 
# Number of seconds to wait for display to respond after the user has 
# selected a host from the chooser. 
# Default is 15 
#ChoiceTimeout=10 
# Strip domain name from remote display names if it is equal to the local 
# domain. 
# Default is true 
#RemoveDomainname=false 
# Use the numeric IP address of the incoming connection on multihomed hosts 
# instead of the host name. 
# Default is false 
#SourceAddress=true 
# The program which is invoked to dynamically generate replies to XDMCP 
# DirectQuery or BroadcastQuery requests. 
# If empty, no program is invoked and "Willing to manage" is sent. 
# Default is "" 
Willing=/opt/kde3/share/config/kdm/Xwilling 
 
I checked /opt/kde3/share/config/kdm/Xaccess twice as well and it reads: 
*                                       #any host can get a login window 
*               CHOOSER BROADCAST       #any indirect host can get a chooser 
 
I do the folloing: 
I use laptop with SuSE9.1/KDE3.4.2, within laptop's KDE session I choose 
K->switch user->start new session. After that another X server is run on vt8 
displaying laptop's KDM login screen. I choose "remote login" from drop-down 
menu and I get XDMCP menu with remote server listed there. After double-click 
on server (or pressing enter) this menu window closes and I'm returned to my 
laptop's session back. After I set GDM with YaST on remote server (by 
connecting monitor/kbd and logging in locally) I can log in successfully and 
see GDM running after I hit enter in laptop's XDMCP menu. 

Willing=/opt/kde3/share/config/kdm/Xwilling  - that's definitely not the kdmrc 
I asked about 

 (In reply to comment #3)  
> Willing=/opt/kde3/share/config/kdm/Xwilling  - that's definitely not the  
kdmrc   
> I asked about   
Sorry, I missunderstood you and posted 
the /etc/opt/kde3/share/config/kdm/kdmrc contents. Monday will have access to 
server and will check sysconfig/kdmrc file. 
  

(In reply to comment #3) 
> Willing=/opt/kde3/share/config/kdm/Xwilling  - that's definitely not the 
kdmrc I asked about  
 
Well, there's no /etc/sysconfig/kdmrc file. 
There's /etc/sysconfig/displaymanager in there, reading (comments omitted): 
DISPLAYMANAGER="kdm" 
DISPLAYMANAGER_REMOTE_ACCESS="yes" 
DISPLAYMANAGER_ROOT_LOGIN_REMOTE="no" 
DISPLAYMANAGER_STARTS_XSERVER="no" 
DISPLAYMANAGER_XSERVER_TCP_PORT_6000_OPEN="no" 
KDM_SHUTDOWN="auto" 
KDM_USERS="" 
KDM_GREETSTRING="" 
DISPLAYMANAGER_AUTOLOGIN="" 
DISPLAYMANAGER_PASSWORD_LESS_LOGIN="no" 
DISPLAYMANAGER_KDM_THEME="SUSE" 
 

I never asked about /etc/sysconfig/kdmrc - sysconfig/kdmrc was no path, but 
short for "sysconfig or kdmrc". OK, but if your REMOTE_ACCESS=yes, then what 
does SuSEconfig --module kdm3 output? 

I apologise for late reply - had no access to hardware. Here's what SuSEconfig says:
barracuda:~ # SuSEconfig --module kdm3
Starting SuSEconfig, the SuSE Configuration Tool...
Running module kdm3 only
Reading /etc/sysconfig and updating the system...
Executing /sbin/conf.d/SuSEconfig.kdm3...
Finished.
barracuda:~ #

hmm, then it should have set this correctly in kdmrc. It works fine here, I can "Xnest -query localhost :1" from a machine with that settings. Can you check if kdm listens on port 177?

Yes, it does on UDP:177

I just saw someone making a commit to 3.5 for kdm. But I have my doubts that's the fix. 

Do you have something in either /var/log/kdm.log or /var/log/messages if you try Xnest -query localhost :1 ?

Unfortunately nothing there related to X...

This may relate to a bug I'm looking at where, if there are unresolvable names in Xaccess kdm login via XDMCP will not work whereas it will with GDM, XDM, etc.

Here's update: KDM listens on XDMCP port on IPv6 proto only, i.e. no IPv4 177 udp port opened:
swordfish:~ # lsof -i udp -p 177
kdm     20786   root    8u  IPv6 373419       UDP *:xdmcp
swordfish:~ # netstat -nau
Active Internet connections (servers and established)
Proto Recv-Q Send-Q Local Address           Foreign Address         State
udp        0      0 0.0.0.0:32768           0.0.0.0:*
udp        0      0 10.232.0.60:137         0.0.0.0:*
udp        0      0 0.0.0.0:137             0.0.0.0:*
udp        0      0 10.232.0.60:138         0.0.0.0:*
udp        0      0 0.0.0.0:138             0.0.0.0:*
udp        0      0 127.0.0.1:50763         0.0.0.0:*
udp        0      0 127.0.0.1:47452         0.0.0.0:*
udp        0      0 0.0.0.0:5353            0.0.0.0:*
udp        0      0 0.0.0.0:111             0.0.0.0:*
udp        0      0 0.0.0.0:631             0.0.0.0:*
udp        0      0 127.0.0.1:38905         0.0.0.0:*
udp        0      0 127.0.0.1:50938         0.0.0.0:*
udp        0      0 :::177                  :::*
swordfish:~ #

While X11 listens on both IPv4 and IPv6:

swordfish:~ # netstat -nat
Active Internet connections (servers and established)
Proto Recv-Q Send-Q Local Address           Foreign Address         State
tcp        0      0 0.0.0.0:139             0.0.0.0:*               LISTEN
tcp        0      0 0.0.0.0:111             0.0.0.0:*               LISTEN
tcp        0      0 0.0.0.0:6000            0.0.0.0:*               LISTEN
tcp        0      0 0.0.0.0:631             0.0.0.0:*               LISTEN
tcp        0      0 127.0.0.1:25            0.0.0.0:*               LISTEN
tcp        0      0 0.0.0.0:445             0.0.0.0:*               LISTEN
tcp        0      0 10.232.0.60:139         10.232.0.200:1306       ESTABLISHED
tcp        0      0 10.232.0.60:139         10.232.0.118:1445       ESTABLISHED
tcp        0      0 10.232.0.60:139         10.232.0.2:1873         ESTABLISHED
tcp        0      0 10.232.0.60:139         10.232.0.161:3713       ESTABLISHED
tcp        0      0 :::6000                 :::*                    LISTEN
tcp        0      0 :::22                   :::*                    LISTEN
tcp        0      0 ::1:25                  :::*                    LISTEN
tcp        0      0 10.232.0.60:22          10.232.0.1:53625        ESTABLISHED
swordfish:~ #
swordfish:~ # lsof -i tcp -p 6000
COMMAND   PID   USER   FD   TYPE DEVICE SIZE NODE NAME
portmap  2942 nobody    4u  IPv4   5495       TCP *:sunrpc (LISTEN)
smbd     3037   root   26u  IPv4 251098       TCP swordfish.arbatek.ru:netbios-ssn->10.232.0.200:re-conn-proto (ESTABLISHED)
master   3331   root   11u  IPv4   6978       TCP localhost:smtp (LISTEN)
master   3331   root   12u  IPv6   6979       TCP localhost:smtp (LISTEN)
sshd     3557   root    3u  IPv6   7651       TCP *:ssh (LISTEN)
cupsd    3642   root    0u  IPv4   9018       TCP *:ipp (LISTEN)
smbd     3948   root   22u  IPv4   8874       TCP *:microsoft-ds (LISTEN)
smbd     3948   root   23u  IPv4   8875       TCP *:netbios-ssn (LISTEN)
smbd    12403   root    5u  IPv4 302991       TCP swordfish.arbatek.ru:netbios-ssn->10.232.0.118:proxima-lm (ESTABLISHED)
smbd    13164   root   26u  IPv4 308610       TCP swordfish.arbatek.ru:netbios-ssn->10.232.0.2:fjmpjps (ESTABLISHED)
sshd    19998   root    3u  IPv6 371346       TCP swordfish.arbatek.ru:ssh->office:53625 (ESTABLISHED)
sshd    20001   alex    3u  IPv6 371346       TCP swordfish.arbatek.ru:ssh->office:53625 (ESTABLISHED)
X       20788   root    1u  IPv6 373428       TCP *:6000 (LISTEN)
X       20788   root    3u  IPv4 373429       TCP *:6000 (LISTEN)
smbd    21872   root    5u  IPv4 139153       TCP swordfish.arbatek.ru:netbios-ssn->10.232.0.161:tftps (ESTABLISHED)
swordfish:~ #

it works fine for me. Please retest