Ok just so we are clear you will not be connecting via telnet. If you connect a console cable from your laptop to the router then this is a serial connection.
1. Fire up Putty
2. Click on Serial radio button
3. Select the right COM port (usually COM1 but try COM2 or COM3 if that does not work)
4. Go with default speed (9600).
5. Type CiscoSerial in the Saved Sessions field and click on Save. This will save your settings for future connections. (Next time just select CiscoSerial and click Load).
6. Click Open. This will connect you to the router over the console cable. If it does not work, odds are you have chosen the wrong COM port. Just change the COM port and try again.
7. This is not a vty connection so setting a vty password will have no effect, this is a tty (teletype) connection so you will probably have access to user mode (the router> prompt) without being prompted for a password.