While using adapter.exe (latest, 4.0 release), logging in through Telnet (tried 2 clients), no command is recognized. Strange characters appear that seem to impede the ability to use Telnet. I'll test this more and try and re-create it, but we tried with 4 users on 2 machines and obtained the same result.

Second, one player was logged in as an object rather than a player. Very strange.

you ARE running the server right? Make sure you have your ports are entered right.