Users cannot type in commands at connection screen

Set up PennMUSH to run under Windows 2003 Server Enterprise edition, and it seems to run just fine. However, people trying to connect through raw Telnet (98 and XP) cannot type in anything at the connection screen. MU* Clients such as SimpleMU do not have any problems connecting.

Any ideas?

Could be some sort of telnet negotiation that is happening. Hard to say what exactly without some sort of packet trace.

For instance, MUSHclient has a "debug packets" facility, you could use that to see what is going on between the client and server.