I think from your description that there's nothing that the kindlet can connect to. This is not a stand-alone terminal, but only one half of it: It expects to be able to make a telnet (or SSH, depending on what you use) connection to the kindle itself. This means that either an SSH or a telnet daemon must be running on the Kindle. The "usual" way to archieve this is to install USB networking.
For this, you might need to jailbreak the Kindle, sorry. Anyway, at least temporarily it must have been jailbroken anyway in order to install Kite - it's probably done automatically when installing Kite. Sorry, I've never tried Kite as I don't really need it.