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If pressing ALT plus a key gives you strange characters in xterm (e.g. ALT+x gives ø), the solution that worked for me was to add the following to .XDefaults:
XTerm*VT100*metaSendsEscape: true
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I owe you an awesome, gigantic beer, I have googled hours to find the solution of this strange issue, and it was here in the forums of my distribution
Mortuus in anima, curam gero cutis
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