when you telnet, if you are using Windows telnet, you need to have an Xserver running to allow the Unix box to communicate back to your PC.
so, under eXceed's Xconfig, regardless of the mode (passive, broadcast, etc), look at the display number you have set (typically 0, but changeable to whatever you like).
in the telnet session:
Korn/Borne Shell --> export DISPLAY=<your PC IP address>:<the display number above>
(e.g.: export DISPLAY=myWinTel:0
C-Shell --> setenv DISPLAY myWinTel:0
Meanwhile, on the PC, you need to start the Exceed program (Start --> Programs --> ... Exceed) and leave the iconfied (passive mode) icon running in your task bar.