problem:

After installing RH8 on a HP Compaq DL380 G3 machine I could not telnet at all. Even 'telnet localhost' failed on the console.

I typed 'chkconfig --level 345 telnet on' and then 'telnet localhost' worked ok. But via network is doesn't.
Extra info: the server has 2 network adapters and I have created an extra virtual interface 'bond0' (next to eth0 and eth1). There is a bonding driver on the HP.COM site.

Why can't I telnet to the machine? Firewall problems?
Security level too high?

The machine is not responding op de telnet port.
Telnet server is running since 'telnet localhost' on the console is functioning ok.

Don't use telnet, disable it completely. Telnet is terribly insecure and trivial to exploit. Use SSH for remote login instead.

Yes I would have to agree that telnet sucks. If you are using a windows computer to do the editing then I'd use Putty to connect to ssh server.