Log into the console as root on the affected machine.
cd to the /dev directory.
./MAKEDEV pty0
./MAKEDEV pty1

I suspect you forgot to make the pseudo ttys.
-Brian

On Aug 11, 12:13pm, HP wrote:
} Subject: 
} Subject: Telnetd problem
} 
} Hi all.  I have a problem with telnetd, and i was wondering if anyone has 
} any ideas...  i have just installed NetBSD 1.1 on to a 486DX2-66 system,
} and whenever i try to telnet into it from my other NetBSD 1.1 system, i get
} an error message saying "Telnetd:  All network ports in use", or something
} similar.  It then proceeds to close the connection.
} 
} Telnetd works perfectly on my other 386 system.  I can also ping and ftp
} to the 486 successfully, but telnet fails.  Any suggestions?
} 
} Thanks
} 
} Paul Hollow
} 
}   _   _ ___  ph-a @ minster.york.ac.uk    C=  /// There's no such thing
}  I I_I I _ \ hollow @ bcs.org.uk       A1200 ///  as gravity...
}  I  _  I  _/ Dept. of Computer Science  \\\/// ...the Earth just sucks.
}  I_I I_I_I   University of York, UK      \XX/ http://www.york.ac.uk/~ph100
} 
} 
>-- End of excerpt from HP