arduino mega and ethernet shield

I received an arduino mega 1280 last christmas and it sat in my closet till a week ago when I received an ethernet shield. The ethernet shield says that it's "mega compatible."

However I am unable to get the example sketch of the chat server to work. When I try and telnet to the arduino board I just get a connect failed error. Do I need to jumper or hack anything to make this work? I've been Googling for the past hour and am unable to come up with useful information.

I'd normally consider myself fairly adapt at learning these things, but perhaps the bottle of wine I've had is impairing my ability to figure this out...

using arduino ver 21

Arduino communicates with both the W5100 and SD card using the SPI bus (through the ICSP header). This is on digital pins 11, 12, and 13 on the Duemilanove and pins 50, 51, and 52 on the Mega. On both boards, pin 10 is used to select the W5100 and pin 4 for the SD card. These pins cannot be used for general i/o. On the Mega, the hardware SS pin, 53, is not used to select either the W5100 or the SD card, but it must be kept as an output or the SPI interface won't work.