Does this require their software on the router?
No, it is the line that is training so it does not matter what router is connected to it. Most would advise leaving a Sky router on though, just in case there is a problem and you have to call support. Some of the support staff will not bother, but others will just say they don't support the non Sky router and hang up.

No idea why telnet is not functioning, maybe it is blocked in the firmware.