As you can find out the normal copy paste is not working in Lubuntu Xterm.This blog: http://www.davidsimmons.com/soft/xtermhacks/ looks to me too complicated.
I just have to get used to my mid mouse button that will copy+paste the selection in XTERM.
The paste in other application is working also by pressing the middle button. If you do not have one click both the left and right buttons simultaneously to paste.