How to disable -nolisten?

You need to edit /etc/lightdm/lightdm.conf and add xserver-allow-tcp=true to it. Here's what mine looks like:

[SeatDefaults]
greeter-session=unity-greeter
user-session=ubuntu
xserver-allow-tcp=true

[XDMCPServer]
enabled=true

After that, run this:

sudo restart lightdm

If you have problems restarting, just 'ps ax | grep lightdm' and kill all the associated processes, then:

sudo start lightdm

I haven't researched yet, but I'm sure there are lots of configuration options for lightdm, I'm just not certain that they all work at the moment. But this one does. Here's what my X server process looks like now:

2981 tty7     Ss+    0:00 /usr/bin/X :1 -auth /var/run/lightdm/root/:1 vt7 -novtswitch

As of Ubuntu 16.04, it seems to be /usr/share/lightdm/lightdm.conf.d/100-custom.conf

and it wants to contain:

[SeatDefaults]
xserver-allow-tcp=true

[note another user felt the file could also be /etc/lightdm/lightdm.conf.d/100-custom.conf]

edit /usr/share/gdm/gdm.schemas, setting the key security/DisallowTCP to false