Telnet won't run from cmd prompt in windows 7
It appears that on Win7 64 bit, telnet.exe is a 64 bit command. You can run it from 64 bit shell (or cmd prompt), but a 32 bit shell will attempt to load it from SysWOW64, and it won't be found there.
I suspect that you are running a 32 bit command prompt (for example, from SysWOW64). If you run 64 bit command prompt, telnet should work.
You can test this by going to Start Menu > Run, type cmd
and then run telnet from this command prompt.
How are you starting your command prompt? If it's a link, take a look at the properties. If it's from another program, and that program is 32 bits, then that could be the issue.
Realise this post is (very!) late but just had the same issues. Resolved it by also copying C:\windows\system32\en-us\telnet.exe.mui
to the corresponding folder in syswow64
. Hope this helps someone else out in future.