Yes, it is obvious that

1) your listener is not running (check for existence of /rc/bin/service/tcp25)

or

2) the listener cannot launch /rc/bin/service/tcp25

or

3) upas/smtpd fails to run to the point at which it writes out the banner


Make sure the file /sys/log/listen exists and is append only and world read/write.
You should see messages in there indicating the call (i.e. the TCP socket from
your telnet got established).