SERVER/process_packet: connection rejected for root

Superserver for Unix platforms does not have a true local access method. Instead
it uses localhost to simulate "local" connections.
This error occurs because the server tries to initiate a local connection via
localhost and isn't a trusted host.
To remedy this you just need to make sure localhost is a trusted host.
One way you can do this is by adding localhost to the /etc/hosts.equiv file.

As you noticed the server is actually started despite the error message.

Regards
Paul