I managed to fix this. The problem was the login button on the login page was not firing the postback event, so I was unable to login. This was only a problem in IE. Firefox worked fine. After googling around, I found the following article
You cannot post data to a non-NTLM-authenticated Web site
From what I understand, if you visit an NTLM authenticated folder i.e http://localhost/telerik/Sitefinity3.6/
which is Windows Authenticated and then visit an anonymous access folder i.e http://localhost/telerik/tiusite_v3.6_sp2/sitefinity/login.aspx
then you won't be able to post data. I guess that is why the postback was failing.
So I enabled both Anonymous & Windows Authentication in IIS for the virtual directory http://localhost/telerik/tiusite_v3.6_sp2
. After I did this I was able to successfully login to the administrative area using Internet Explorer.