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Unable to Telnet to other devices, and the %telnet connections not permitted from this terminal error message is received when an attempt is made to session to other modules
In the Cisco Catalyst 6500 switch running in native Cisco IOS® 6509, configured to allow only Secure Shell Version 2 (SSH2) connections, it is not possible to Telnet out to a non-SSH switch or router. Also, the session command cannot be issued in order to access a module in Cisco Catalyst 6500 switch. The Command Line Interface (CLI) prompt shows that "telnet" and "session" are valid commands.
The only workaround for this issue is to connect to the Cisco Catalyst 6500 switch through the console port. This can be done remotely with a console server.
Telnet attempts display the % telnet connections not permitted from this terminal error message and after few attempts, the module number is flagged as invalid. This happens because the VTY (Telnet) is misconfigured as transport output none.
The configuration looks similar to this one:
line vty 0 4
exec-timeout 60 0
transport input ssh
transport output none
flowcontrol software out
In order to resolve the "telnet out" and "session to the module" issue, configure the transport output command for the required protocol.