Is enabling telnet a security concern?

Telnet is a protocol that allows one computer to execute a text terminal on another. It's just a connection that transfers text from one to the other computer.

The Telnet server will listen for incoming connections into YOUR COMPUTER. Mostly you will be unaffected since you will likely be behind a little SOHO router, and those don't just let things through like that.

The Telnet client will be installed as a tool for usage in the cmd. If you open the command prompt, you can then type "telnet <server>", replacing <server> with a server name.

Today this is absolutely not used anymore to administer servers and other PCs, since Telnet is insecure. It might be used in very small private networks though.

Telnet is still used on Internet Bulletin Board Systems. These are old forums that are text-only and can only be navigated using the keyboard.

telnet is not encrypted, your password and all other data will be transmitted as clear text. "telnet server" means, that windows will listen on port 23 for incoming connections allowing users to login (and allowing non-users try to mess with your computer -> potential risk). I'm not sure what "telnet client" means in this context, but i guess the windows firewall will accept outgoing connections on port 23.

Don't use telnet unless you really need to. Use ssh instead (outgoing). For incoming connections see http://en.wikipedia.org/wiki/Comparison_of_SSH_servers