Sorry, I can answer re: "seeing a replica of a telnet window and see what exactly is being entered? "
Is your "byte written 2" correct?
If not, it may be due to you send ASCII characters and not hex. Right-click on your string constant and select "hex display" to enter the values as hex.
Do you have any indication the password is working correctly i.e. does a led light to indicate logged on?
Don't have that toolkit installed on this machine so that's as far as I can go for now.
Ben