I believe this extension is a bit "broken": It contains a "user.tar.gz" which IIRC was quite some time ago used to facilitate some startup configuration. As this was basically before my time of "playing around with TC" I'm not sure that what I did as work-around is correct.
In an attempt to test the extensions on TC 2.11 I added the following to '/opt/bootlocal.sh':
[ -f /user.tar.gz ] && tar xzf /user.tar.gz -C / >> /tmp/boot.log 2>&1
xdm &
I then created a password for user 'tc', made sure that it worked, and rebooted the system. There was now a login screen and 'Xvesa' was now started by 'xdm'
tc@box:~$ ps -o 'pid,ppid,user,args' | grep xdm | grep -v grep
460 1 root xdm
466 460 root /usr/bin/Xvesa -ac -br -screen 1024x768x32 -shadow -mouse /dev/input/mice,5 -nolisten tcp -I :0 -auth /usr/local/lib/X11/xdm/authdir/authfiles/A:0-OsM05e
Any false user name / password combination was refused with a "Login incorrect" message, but when supplied with the correct details one could see for a split second the familiar TC wall paper, but that did not last long and one was again presented with the "X Window System" login mask. The brief (but failed) login left an entry in a new file:
tc@box:~$ cat .xsession-errors
Xlib: extension "Generic Event Extension" missing on display ":0.0".
Now, we all know that this message itself is not critical, but the fact that it appeared as consequence of the login request might help in the troubleshooting.
BTW, I got all those details by switching around between the console (with "Ctrl-Alt-F1") and the Xvesa screen (with "Ctrl-Alt-F2"). Funnily enough the console access is not password protected so that I guess defeats a bit the idea of asking for a user login.
I now wonder if someone else is curious enough to take a closer look into this. The whole thing is not really important to myself but I got interested as the question of how to use 'xdm' popped up today in some other
thread.