Ssh – XAUTHORITY environment variable set repeatedly on every login

First a clarification, X is not a window manager, it is a windowing system.

Now, the ~/.Xauthority file is simply where the identification credentials for the current user's Xsession are stored, it is the file read when the system needs to determine if you have the right to use the current X session.

You should never copy an existing one from another account, the file should always belong to the user running X and is created automatically when you start a new X session. So, just delete the one you have, and then run startx again, everything should work as normal:

$ rm ~/.Xauthority; startx

Since $DISPLAY is correctly set and the ~/.Xauthority file is not created, this can mean that, though X11 forwarding is taken into account, xauth is not run. One reason could be that it is not in the path (I had this problem under Mac OS X, but this would be strange under Linux). You may want to do the work yourself by creating a ~/.ssh/rc file. For instance, I have the following:

if [ -n "$DISPLAY" ]; then
  echo "DISPLAY: $DISPLAY" >&2
  if read proto cookie; then
    if [ `echo $DISPLAY | cut -c1-10` = 'localhost:' ]; then
      echo add unix:`echo $DISPLAY | cut -c11-` $proto $cookie
    else
      echo add $DISPLAY $proto $cookie
    fi | $HOME/.ssh/xauth.wrapper -q -
  fi
fi

where ~/.ssh/xauth.wrapper is a wrapper to xauth that implements the locking of the ~/.Xauthority file. But you can use just xauth or the full pathname to xauth just in case... This is much like what is described in the sshd(8) man page (see Section "SSHRC").

Be careful not to do any mistake.