You can run the
rz command on the remote machine to receive it and then run
sz on the local machine to send it with the zmodem protocol. Those are part of the lrzsz package on Linux, and I think it is just rzsz on Cygwin.
But using sz and rz directly can be very awkward, which is why I use
zssh which has a built-in way to call them. The zssh package includes a
ztelnet client that does the same for telnet.
There are probably other telnet clients that support zmodem transfers, if you google for them.
BTW, why are you using telnet? Most people are switching to ssh because it is more secure in this era of malware on windows PCs. If you have ssh setup to work, you can use the
scp command directly from the command line to copy stuff something like this:
$ scp localfile server.com:/home/user/somedir/
$ scp server.com:somedir/otherfile localdir/