(insert stock line about telnet not being secure and how one should use ssh here
)
It would seem that your "only_from" line is incorrect. There really is no CIDR notation definition for "/200". If you want to allow access from any address in the 192.168.1.0/255.255.255.0 network, you would enter "only_from = 192.168.1.0/24".
Not sure if this is your only problem, but it might help. You might want to check your system logs on the Linux box (/var/log/messages, perhaps) to see if any error messages are being generated by the server when you attempt to telnet in.
In reference to the other reply, xinetd is just a replacement for inetd. The same daemon (in.telnetd) can be run from either one. The poster's point was that you can't run "in.telnetd" from a command prompt (for reasons probably beyond the scope of this discussion).