I don't think you can name a server 'localhost'. If you do a name lookup in the client, you will see something like this:
~> nslookup -sil localhost
That address (127.0.0.1) is the loopback interface. That is like a network interface that's internal to one machine. You can connect a client and server to it for testing purposes, but it doesn't connect to the other machines in the network.
Try to find the server's IP address and connect with that instead. To find it out, type '/sbin/ifconfig' in a terminal windows on the server.
Second, to enable ftp server in RedHat go to (from the start menu) 'Server Settings' > 'Services' and enable 'vsftpd'. Then you need to restart 'xinetd' to make the changes take place.