Why do you change /etc/fstab? If you want to run ‘xterm’, /etc/fstab is for setting up file systems (File SystemTABle), and ‘xterm’ wants a ‘pty’=terminal interface.
I hope you are not trying to run ‘xterm’ from the command line (Normally run-level 3), i.e without any graphics started. It wil not work, since ‘xterm’ requires an X-windows server to be running.
If you have started your X-Windows server (Graphical mode, normally run-level 5), then either finding ‘xterm’ in one of the menues for starting programs, or typing xterm in another terminal window should work.
Tell us more about what you are trying to do.