Vista -
Use software explorer or Click Start, Control Panel, Programs, and then Turn Windows Features on or off.
In the list, scroll down and select Telnet Client.
Click OK to start the installation.
Windows 2008 Server
Use RMT to install
If you want to use command line options – please use the following commands -
Command line to install telnet server:

    start /w pkgmgr /iu:”TelnetServer”

Command line to install telnet server:

start /w pkgmgr /iu:”TelnetClient”