This is actually caused by the util-linux-2.12a-pamstart.patch
in the util-linux rpm. It seems to want to use 'remote' instead
of 'login'. No idea why or how exactly that works. Making a
copy of /etc/pam.d/login to /etc/pam.d/remote might work, though
I honestly have no idea, I just recompiled it with that patch
disabled.
There is something wrong with the telnet server. When you try to use
it does not prompt you for a username & password you get this:
[root@sendfinder vmwareboy]# telnet 192.168.1.10
Trying 192.168.1.10...
Connected to 192.168.1.10.
Escape character is '^]'.
Fedora Core release Rawhide (Rawhide)
Kernel 2.6.9 on an x86_64
Login incorrect
Login incorrect
Login incorrect
Login incorrect
and your stuck...we have a bug!!
Though I do not advocate the use of telnet, but there are a few
cases....and I mean few...that people do have to use it. But if you
are using it you need to find a way to get away from it!