Failure to configure a telnet password on an IOS-based switch results in the password required but not set message being displayed when attempting to Telnet into the switch.
This applies to any Cisco device running Cisco IOS , whether Telnetting to a router feature card or module running Cisco IOS within a chassis that has a supervisor running CatOS, a separate router running Cisco IOS, or a Catalyst 4000/4500 or 6000/6500 family member running in Integrated mode (Cisco IOS that replaces CatOS). This does not apply to CatOS.
The password required but not set message indicates that a telnet password needs to be configured on the switch. This is done by issuing the following commands through the switch console:
switch> enable switch# config t switch(config)# line vty 0 4 switch(config-line)# password switch(config-line)# exit switch(config)# exit switch# write mem
After this configuration is done, a password prompt should come up when Telnetting into the switch.