One aspect that confuses many about installations of such custom
drivers is that Windows keeps a copy of any applied .inf files in
Windows\INF\OTHER folder. That's where Windows looks first and if a
suitable inf file is found there, it is automatically selected. If you
want a choice, delete the offending file(s) from that folder and
Windows will once again start asking for locations for installation
files.
The other side of this issue is that any named files required inside
such a custom inf file should be supplied in the same folder as the inf
file. Perhaps THEIR telnet.exe file is different from Win98's copy of
the same named file and it's not working for that issue? Usually such
named files from these inf files are placed in the Systems folder and
you may have a form of dll hell where similar named dll support files
are not the right versions and/or linked to other missing/wrong
versioned dll files. One might track that a few layers deep with
Dependency Walker but it could get very confusing very fast.
Especially after so many attempts have been made.
http://www.dependencywalker.com/
Try unzipping the cab files to seperate folders so that if a proper
driver is found it is not matched to the wrong support file(s).