Ralph,
After looking at the logfile, it seems that your problem lies in the fact that you are using the Windows telnet server. It seems that almost all telnet servers that run on Windows essentially run a DOS command prompt on the server side and screen-scrape the data to send to the telnet client. Usually, this results in the server re-painting the telnet window over and over again, instead of actually scrolling.
You can try other telnet servers and get better results, but this depends on the other server recognizing a scrolling event in the DOS window and communicating this to the client properly. You're going to have to do some trial and error with this, but I'd be grateful if you posted your findings here!
I did try a windows SSH server WinSSHD (
www.winsshd.com) and it seems to handle scrolling pretty well. However, this IS an SSH server and not telnet.
The short answer is that the scrolling capability is more a function of the Windows telnet server, so you'll have to try a few to find one that suits you.
Brian