Make sure you have initialized Putty as described here:
http://www.visualbuild.com/Manual/plinktunnelaction.htm
Also, your Create Tunnel step creates a local endpoint at localhost, port 2023 for linuxbld3, port 23 (default Telnet port), but your Telnet step is not using the tunnel (connecting to 10.0.4.70 port 21 instead of locahost port 2023).