mlterm won't start with error open_screen_intern failed

[Micha Feigin <michf@post.tau.ac.il>]

I installed mlterm and it fails to start with the following error:

Unable to start - open_screen_intern() failed.

I tried adding pty support in the kernel but it didn't seem to help.
What kernel side options does it need ?
Is there anything else that can cause this trouble?