I don’t believe tinit is involved here. (I could be wrong, it’s been a while).
When you telnet into a machine, 1) the fact you have to wait a long time to see the “connected to …” line, means you have a mis-configuration of DNS resolving on QNX side.
Once connected, inetd start telnetd, telnetd in turn open a tty/pty pair (thus devc-tty need to be there), telnetd will then spawn /bin/login on one side of the terminal, the fact you see “telnetd: /bin/login: …” indicate /bin/login is spawed, but faild.
/bin/login involve a few other files, /etc/passwd, /etc/shadow, and probably /bin/sh are all important. You may want to check all these files exisit at the right place.