You need to make sure that the username and password prompts that the host system is presenting match the prompts that you have configured in the TelnetCE settings. For example, in your screenshot, TelnetCE is configured to look/screenscrape for a prompt that is just "login:" and then a follow up prompt of "password:". If those prompts don't match what your host system is presenting then this auto login feature won't work correctly.
Thanks a lot for the hint, it does make sense.
I will let the customer know and get back here,
Best regards, Manoel