A failing 'telnet' command to login is not a Data Protector issue, you need to be taking this up with Windows support
The only time Data Protector uses the 'telnet' is to connect to the Agents prior to starting a Backup or Restore. The test for this is
telnet [hostname] 5555 Do not include the [ ] marks
If this is failing try just the 'telnet', which is what I suspect that you were trying
telnet [hostname]
Check to see if the 'telnet' service is running, if not, start it manually. A lot of Windows systems do not even have the 'telnet' service installed, so, you would need to do that first