what are all the packages you installed in your server? telnet and telnet-server must be there.
what your /etc/xinetd.d/telnet file says
disable=yes or no
It should be no.
There must be two more files. (ekrb5-telnet and krb5-telnet) Both the files should contain disable=no. Then enable the telnet service thorugh "ntsysv" Restart the xinetd service. Then you can access even with the root privilege. All these things are only for RHEL 5.series
login into the server. And give me the output of "rpm -qa |grep -i telnet*" command. And also post the content of the /etc/xinetd.d/telnet file. I hope your network is ok. Can you ping to your server.
Hey, are you trying to login with the root user. If so put pts/1, pts/2, pts/3,pts/4 and pts/5 in the file /etc/securetty. It should be as follows