You must have an account on the macine you are logging into that you either have created yourself or know the password for. Like any Linux or UNIX machine, the box you are telneting or ftping into should have at least one normal user account associated with it. Once you have one established, simpy telnet into the box and do your work.
You will need root access on the box you are telneting into in order to give yourself root power through the account you logged in under.
As far as SWAT is concerned, I am currently trying to get it going myself. I have all the settings right, but I dont get anything when I bring up Netscape and type the following:
http://localhost:901
Tells me a connection cannot be made.
Hope this helps a little......