If only the power LED is on, then the PCTV is not completely intializing. But you're getting the "ready" LED to light up as well, so your unit *is* booting.
And (of course), if you're getting the telnet prompt, then obviously the network is loading, etc. but somewhere in the reset process things are going awry?
What I think:
The power LED is the rightmost LED. The LED to the left of the power LED is the "ready" LED. If the "ready" LED is not lit, then the unit has not received an ethernet address, and (guessing) that means that the PCTV program isn't completely running, which means that the software reset probably won't work. Although on my machine, I have an internal wireless card, so I pretty-much *always* get a 2nd light lit (because a default wireless network is installed) until I've reconfigured the box to NOT use the Wireless.
The other 2 LEDs indicate local and remote streaming, and aren't important for this discussion.
If your machine gets the 2nd-to-the-right LED to light up, and if it responds to the PCTV To Go Settings (admin) page by asking for a password, it sure sounds to me like it's up and running. This would make me think (hope) that your issue could be as simple as a bad reset switch. Hey, it could happen.
What if you grab a screwdriver set and (possibly) a small paperclip and:
1) With the power supply and Ethernet cord handy for the next step, remove the PCTV motherboard from its case. (Take standard static-electricity precautions---grab it by a big grounded metal bit, such as the shell around the NTSC tuner, if it has one, or the shells of the composite/component connectors, and continue to hang on to where you grabbed it so you don't risk "zapping" anything).
2) Locate where the reset button is soldered on to the motherboard. It's a little-bitty "clicky-button", and if someone was over-exuberant in how it was clicked, the button could be levered off of the mobo, the traces on the mobo could be lifted and broken, etc. At any rate, look for where the 2 contacts from the button attach to the motherboard -- that's what you're going to manually short out to bypass the button itself.
3) Once the unit finishes booting (plug in the Ethernet cable if you want to see that 2nd LED light up "just to be sure"), take a small screwdriver or a bent paperclip or some such and jumper across the button lands (or an appropriate place along the trace if the traces are broken). This takes a few seconds, so be patient.
If the unit then does its "blink-blink-blink" of all 4 LEDs, then you have reset the unit AND you've diagnosed that you have a bad button. 
If that works, then place the unit back in its box, and call it good. If it doesn't work, again place the unit back in its box, look to see if you have a serial header on the top of the mobo, and we can look at doing "something" via a serial console like I ended up having to do in this thread. Which takes a bit of doing, as you'd need to come up with a serial header and a way to attach that header (I believe using a DCE configuration) to a computer's serial port. But it can be done -- I've done it here.
But bottom line: Since you SEEM to be able to get to the unit via the PCTV To Go Setup wizard (or it wouldn't prompt you for a password), I think your issue isn't as dire as mine was, and (hopefully) it's something simple like a bad button that's causing your issue. Hey, one can HOPE, can't one?
BittMann