For auto login to work using Telnet access PAM required the following login prompt.
Notice that it has capital 'U' in the 'Username:' prompt. Cisco target connector type makes no bearing to this auto login issue. This target connector is being used to verify or update password in the device. So the regular expression setup will not address this auto login issue.
Unfortunately this is hard-coded within PAM and to address this issue we should change the configuration of the Cisco device so it gives above Telnet login prompt as required.
The recommendation is to use more secure SSH access rather than Telnet access.