Telnet stopped working on XP Pro Sp2

Telnet today stopped working on one of our HP notebooks. It appears to be
remote disconnect or something similar.

Have used both Windows telnet and QVTTerm (telnet/terminal program) neither
can connect to the server.

ALL other pc/laptops can connect to the server (Unixware) with no problems.

I have encountered this problem with a couple of other notebooks and
desktops all with XPsp2, but after a full system reinstall they work
correctly.

I presume that this might be an issue with SP2, I have disabled all the
obvious things like windows firewall, av and security centre. I have restored
the laptop to a system restore point when the telnet was known to be working
correctly. All to no effect. The laptop seems to have no other network issues.

EventID 11163, source DNSAPI, System failed to register host resource
records for network adapter, is occassionally shown.

The system is fully updated and I have installed the manufacturers latest
network drivers. I have also tried installing another PCMCIA network card but
the problem still exists. Its almost as if the telnet is dead on this laptop.

Any advice/help would be greatly appeciated