Joe expects to find legacy ptys when trying to run and capture the output of a program from within a joe window (ESC-!). If support for legacy ptys isn't compiled into the kernel, the message "No ptys available" is displayed. A quick look at the source code for joe j(tty.c) indicates that this is indeed the case and there's no code in place to handle ptmx/pts support. The problem can be addressed by recompiling the kernel with CONFIG_LEGACY_PTYS enabled, with the result that /dev gets cluttered up with a lot of (mostly) unneeded devices and device links since most programs that need pseudo-terminals are built with support for the 2.6 kernel modern pseudo-terms.
I've reported this upstream https://sourceforge.net/tracker/index.php?func=detail&aid=1231442&group_id=23475&atid=378598