Figured it out finally...
You have to su to root, then run "launchctl" and then the prompt changes. Use the load command with the -F switch to force enable the disabled service.
SJ-MBP:~ stevejordan99$ su root
launchd% load -F /System/Library/LaunchDaemons/telnet.plist
sh-3.2# telnet 127.0.01
Connected to localhost.
Escape character is '^]'.
Last login: Thu Aug 11 17:30:21 on console
How do you enable Telnet Server in Lion? I need to be able to telnet to 127.0.0.1 and it says connection refused when I try it.
You don't need to telnet to localhost on your box. If you think you do, you are mistaken.
Having said that, what problem are you actually trying to solve, so that someone can help you?