A heart! Simple. Xehanort did have a keyblade but he kept it secret from AtW for whatever reason. Then, when he became Xemnas, he lost his heart and his ability to wield as well.
MX+Terra=Xehanort is also a theory I believe. That is why Ansem SoD has all those similarities to MX, because MX is a part of Xehanort and that part simply was dominant in his heartless as Terra was in Xemnas.
Well that is just what I believe :tongue:
On topic:
I agree, I am 100% sure that Terra in some way is Xehanort. To me, it is either Vanitas+Terra=Xehanort (Takes up about 10% of my belief) or Terra+MX=Xehanort (which takes up 80%)
The other 10% simply goes to the Terranort theory and that SoD looks like he does because MX was such a big thing in Terra's life.