[BusyBox] getty/login problem

[Dan Bar Dov]

I have a problem with tinylogin 1.4 on busybox 0.60.5

I started using devfs, mounted by the kernel. I changed the inittab as
follows:

ttyS0::respawn:/sbin/getty  -L /dev/tts/0 115200 vt102

In addition I have a utelnetd running.

After the system boots, I get no login prompt on the console (tts/0). 
I login fine using telnet. I then checked and I see no getty process
running.
I run the getty command from the command line (in the background), and a
login prompt opens on the console.
After entering the username, the damnest thing happens: the "Password:"
prompt opens on 
my telnet terminal instead of on the console.

If I oblige and enter the password, I get a shell on the console, but my
telnet shell is suspended until I exit
the console shell.

I have no idea what am I doing wrong. 
Any ideas/tests to run?

Thanks,
Dan