I upgraded OpenSSH and X11 forwarding now fails with "X11 connection rejected because of wrong authentication". Lets say you upgraded OpenSSH on machine1 and you now try to ssh to machine2 and X11 forward fails. You get the following errors seen below.
user@machine:~$ ssh -X user@machine2
Warning: untrusted X11 forwarding setup failed: xauth key data not generated
Warning: No xauth data; using fake authentication data for X11 forwarding.
The error you see when trying to open a program expecting X11 forwarding is the following.
X11 connection rejected because of wrong authentication.
X connection to localhost:10.0 broken (explicit kill or server shutdown).
I figured out the problem seems to be trusted X11 forwarding is turned off or disabled. To fix it you have to ssh with the -Y parameter instead of the -X. The other thing you could do is edit your /etc/ssh/ssh_config file on machine1 and set "ForwardX11Trusted" to "yes". Which would look like "ForwardX11Trusted yes".