When connecting to the physical desktop which doesn’t have an X server running (e.g. it’s a headless machine), NoMachine is able to use its own display service (that is an embedded X server) to let users connect seamlessly to a physical desktop running in the background on the remote machine. In that case, the display variable 1001, for example, is created by NoMachine.
Display 0 or 1 is created by the native X server. When NoMachine can’t find it or access it, it asks if you want it to create one for you. Does it not ask?
Why NoMachine is not finding the X server or can’t access it is difficult to say. I’m assuming you are using the latest version of Enterprise Desktop on your server. You haven’t mentioned the distribution and version, nor what desktop environment is running there. You could try enabling debug and reproducing the problem. When you do, share the logs and we’ll take a look.