nfds and mountd are for NFS services, not telnet. Have a look at in.telnetd or something similiar. You might need to edit /etc/inetd.conf or /etc/xinetd.conf (probably the latter - you mean Redhat 7.1 yeah?), or just start the daemon yourself.
By default you probably find that root won't be able to login by default. I would say to edit /etc/securetty but I think you'll need to fight with PAM - not something I've ever really played with.