Telnet fails: set_id: not applicable (SCO)

Upon trying to connect the host with telnet or rlogin (even from the same host)we get it ask the login and password, write the welcome message and then terminate connection with the following error:
telnetd: set_id() failed: Operation not applicable.

What can be the cause of this problem?
Telnet worked yesterday but we have made many changes to the system since.
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Make sure the permission of telnet, rlogin and su in /usr/bin directory
These should be in following permission

 telnet   -r-xr-xr-x
 rlogin    -r-sr-xr-x
 su         -r-sr-xr-x

also make sure login if setuid root!!!
As implied above: check the permissions on telnet
and fix them. If this has happened and you can't
track it down also check for system compromise.

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Unix OS

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