number of telnet clients

I am using fedora 8 telnet server in our college and my students were using windows xp.
My prolblem is only 50 users were able to connect through telnet others were receiving an error a black screen appears with a message “press any key to continue…”.

I want to increase the number of users to access at one time. what could be the problem please any one help out as early as possible.

My server configuration is
HP ML150 G5 Proliant server
with a Quad core processor and 4GB RAM