run in the fedora xterm:
$ Xvnc :1 -geometry 800x480 -SecurityTypes None &
$ vncviewer :1

This should bring up the window with the Xvnc server.
In scratchbox do
# export DISPLAY=:1.0
# af-sb-init.sh start

You should see in the VNC window the environment. Now that I payed a bit more attention to your problem, it may not be possible to launch the ARMEL version of the environment on x86 hosts - qemu still has it's fair share of problems. The environment works best if you use it in X86 mode, and then switch to armel only to compile binaries for the device
The best result for debugging ARMEL is to setup your device with GDB and a remote filesystem and run the debugging on the device itself. To ease up the screen interaction, install also the vncserver on the device and use it through vncviewer.