Xt error: Can't open display!

You may want to take a look at Xming, which provides the X window display server on your Windows host (you could also use Cygwin, for some it might be preferable).

ssh scenario

You need to enable X11 forwarding in the ssh client (putty), and have X11 installed and running on the local machine. The machine name in the DISPLAY variable will not be the local machine, but something like :10 ( a local (from the point of view of the remote machine) connection ).

Direct use VM display

You need X11 running on the machine. If you just have a screen of text, no windows, no graphics, sometimes some colour, then you are not running X11, you can check using ps command.

We cannot tell from the version if it has X11. But do not worry. Ubuntu and Debian have many variants (steeldriver used the word version to describe this. This is correct, but ambiguous). Each variant differs only in what software is installed by default. Therefore it is possible to change variant by installing extra software.

As icespiker said you can add the minimal X11 by typing this into the command line: sudo apt-get install xorg.

You may also want to use gnome, kde, fvwm or a different window-managment-system to go on top of X11.