As you have mentioned that while running "debug telnet" on the router on the other side no hits are seen ,check if any ACL's are enabled on the router which may cause this issue.If any Acl's are there disable them.Also check the pix configuration.
Use the following url to get more info about establishing telnet:
Table of ContentsIntroductionVersion HistoryPossible Future
UpdatesDocuments PurposeNAT Operation in ASA 8.3+ SectionsRule Types
Network Object NATTwice NAT / Manual NATRule Types used per SectionNAT
Types used with Twice NAT / Manual NAT and Network Obje...
Table of Contents Introduction:This document describes details on how
NAT-T works. Background: ESP encrypts all critical information,
encapsulating the entire inner TCP/UDP datagram within an ESP header.
ESP is an IP protocol in the same sense that TCP an...