Encountering Warning No xauth data; using fake authentication data for X11 forwarding

I was encountering this error recently which trying to X forward to another remote site.

"Warning: No xauth data; using fake authentication data for X11 forwarding."
and there was no and doesn't display picture.

These are the steps I took to trouble-shoot

1. I checked my /etc/ssh/sshd_config and noted that the I have "X11Forwarding yes"
2. On my .ssh/config, I have the "ForwardX11 yes"
3. But one of my parameter /etc/ssh/sshd_config  "X11Uselocalhost yes". Apparently,I was able to X11 Forward for hosts specify in my /etc/hosts file, but those outside my host file, I was not able to display the picture.
4. But once I modified the  "X11Uselocalhost no", the issue was resolved.

There was this post that a user explained quite well. (http://www.authsecu.com/nntp/comp-security-ssh/19540-comp-security-ssh-what-does-%22x11uselocalhost-no%22-do.htm)

When doing X forwarding, sshd listens on a TCP socket for connections from X clients. Normally, it will accept connections addressed to the loopback address only (127.0.0.1), restricting it to clients on the local host. X11UseLocalhost no means it will accept connections from anywhere.