KDEINIT: $DISPLAY not set problem.

I am running Debian GNU/Linux Woody and recently upgraded my KDE to 3.1.2 from 3.0.5. First, I tried to upgrade to KDE 3.1.1a before the 3.1.2 update and experienced a few problems. When the KDE 3.1.2 update was released I figured to just go ahead and load it instead of the 3.1.1a update. I changed my sources, did apt-get update, then apt-get dist-upgrade and the packages downloaded properly and installed. That seem to fix a majority of my KDE problems except for one. I get the KDM login GUI and I type in my name and password, the screen goes blank like its trying to load KDE, but goes back to the KDM login GUI screen. I can select the command prompt and login normally, either root or my username and that is fine. At the # or $ prompt, I type in 'startkde', but then I get the KDEINIT: $DISPLAY not set error. However, at the command prompt I can type in 'startx' and KDE loads normally and everything works properly as expected. I have deduced that somehow the link between XServer and KDE is broken. I would like to use the KDM GUI login to access KDE. I do not know the proper load sequence or files that get accessed between the GUI login and loading of KDE. If someone knows that I would greatly appreciate it if you point me to where I can find that information or let me know what files that I need to check. I did something to mess it up during the upgrade to 3.1.1a, but I'm not sure as to what I did. I know I did not manually change any files. Under KDE 3.0.5, everything worked properly. I just wanted the KDE upgrade. I am a little new to Linux, but I really enjoy it very much. I'm running the 2.4.20 kernel.