I have added this issue to the tracker:
https://winscp.net/tracker/2014
You can vote for it there.

It turned out that the problem was because @johnny_jack was mounting VeraCrypt file to A: drive (A: and B: drives are traditionally reserved for floppy drives). Mounting to other letters works as expected.

Sorry, I meant a VeraCrypt file on a flash drive. If I plug in a flash drive that is not encrypted with VeraCrypt while WinSCP is running, it will appear in the local panel drive drop down menu as expected. So it does appear to be restricted to VeraCrypt.

Ok, so it's not restricted to VeraCrypt, right? No newly attached drive appears in WinSCP, is that correct?

I have sent you an email with a debug version of WinSCP to the address you have used to register on this forum.

This might answer the question:

johnny_jack wrote:

I initially mounted a volume of an entire secondary drive, but tried it again with a file and had the same issue.

In other words, I tried it with both a secondary HD that is fully encrypted by VeraCrypt as well as a single file on the main drive.

For good measure, I also tried it with a file on a USB drive and had the same issue.

Can you please respond to this too?

If you mount any other kind of drive (e.g. USB flash disk) does it appear in the menu?

Thanks for your response. I am using the latest 1.24-Update 7 release of VeraCrypt. I initially mounted a volume of an entire secondary drive, but tried it again with a file and had the same issue. I open the VeraCrypt program, click an open drive letter, click Mount, put in the appropriate password/PIM/keyfiles, and mount the file/drive. Note that I have this issue only when the file/drive is mounted when WinSCP is open.

Thanks for your report. Though I cannot reproduce this. When I mount a VeraCrypt drive, it does appear in the local panel drive drop-down menu. How do you mount the drive? What version of VeraCrypt are you using? If you mount any other kind of drive (e.g. USB flash disk) does it appear in the menu?

If a VeraCrypt folder is mounted while WinSCP is running, WinSCP recognizes the folder under Open Directory/Bookmark but after clicking "Ok" it does not come up on the left side under Commander interface, nor in the drop-down menu to the left of the Open Directory/Bookmark button. If I close WinSCP and reopen, it will list the contents of the VeraCrypt-mounted folder on the left side as normal. This is under Windows 10 and the latest version of WinSCP - I have specific version numbers in the log.