This is briefly mentioned in the reference guide under "Using a Nios Serial UART instead of the JTAG UART"
There are 2 parts to getting this to work: 1) changing the kernel console to the serial port (which you appear to have done successfully) and 2) change your inittab file to start a user console on the serial port
To complete the second part of the process, do the following:
a) In your filesystem project open the target/etc/inittab file
b) remove the "# " from the line "# ttyS0:vt100:/bin/agetty 115200 ttyS0"
c) save the inittab file
d) rebuild your filesystem project
e) upload your new romfs.bin to your board
At this point both your kernel messages and your normal login should appear on the serial port.
Dennis Scott
Microtronix Datacom Ltd.