KDE "Run Command" won't start xterm

[Mathijs Romans <M.W.J.Romans@phys.uu.nl>]

Does anyone know why I can't open an xterm from the KDE "Run Command" 
(Alt+F2) since upgrading to KDE 3.4?

When I open the dialog and type "xterm", even the correct icon appears (a 
gear), but when I press enter, an error message appears: "KDEInit could 
not lanch '/usr/bin/xterm'. To check the path I run "echo $PATH > test" in 
"Run Command", after which:
$ cat test
/usr/local/bin:/usr/bin:/bin:/usr/bin/X11:/usr/games

so it should be able to find /usr/bin/X11/xterm, right?

Cheers,
Mathijs