no exec line in the session file: xfce4
In the failsafe terminal, type nano .dmrc
Change Session=xfce4 to Session=xfce
Restart the machine and xfce should start properly. To restart X without restarting the whole system, do sudo /etc/init.d/gdm stop. Switch to another terminal by doing alt+F2, login and then do sudo /etc/init.d/gdm start.