Turn off the phone and remove it from the usb cabel, after that press the back button, and connect it to the usb, you'll see green light and you have few seconds to connect it to the flashtool.
Did you install the drivers in the drivers directory?
Yes it but it has some strangeness, but in apps it works fine, i tested in gangstar mv, and angry birds and will now test it in some fps's like nova modern combat and brothers in arms 2. In the browser it doesn't work, in opera mini - works.
yeah i always thought it should be mentioned in the original instructions. you need get the flashtool dialog box up, and press ok the second the green light goes on on the x10, or else the connection will just cause the x10 to reboot normally