The first error message appears when a toolbox application is started, and the toolboxdaemon is not running. The entry in the /etc/inittab file is correct when set to once, but the toolboxdaemon won't be started, unless the system is brought into multi-user mode with the command:
init 2
The reason for the tiny windows is that the system is running in color mode under the toolbox application and is trying to talk to a monochrome display (the A/UX console) when the error occurs. Try running the system in monochrome mode so that you can read the error message being sent to the screen.