It looks like X was deliberately chosen to denote succession of W, not clashing with it:
"The name X derives from the lineage of the system. At Stanford University, Paul Asente and Brian Reid had begun work on the W window system [3] as an alternative to VGTS [13, 221 for the V system [5]. [...] We acquired a UNIX-based version of W for the VSlOO (with synchronous communication over TCP[24] produced by Asente and Chris Kent at Digital’s Western Research Laboratory. [...] It was also clear that, although synchronous communication was perhaps acceptable in the V system (owing to very fast networking primitives), it was completely inadequate in most other operating environments. X is our “reaction” to W."
I think I sort of meant the same thing, but my wording might have been unclear. Essentially, there already was a W, and they were making something new, so they picked X.
