This 255 value comes from line 73 in consolerunner/main.cpp:
int ret = system(cmdline);.
man system(3) says: "The value returned is -1 on error (e.g. fork() failed), and the return status of the command otherwise". The valid xterm error codes are in the range [1,45], which rules out clause no. 2.
Which means that (assuming your computer isn't unable to fork() because it has a million processes running) in all likelihood you either don't have xterm installed at all or it is not in the path, or something the like.