I can just guess, but I would guess that it can hardly work. WinSCP needs an unix-like shell for the Open terminal feature. I doubt freeSSHd provides one. Use Open in PuTTY function instead.
                
            
        
    
    
        
        
            
            
                Environment:
  Client PC: Windows XP Pro SP2
  Server PC: Windows XP Pro SP2
Software:
  Client PC: WinSCP v4.1.6 Build (412)
  Server PC: freeSSHd v1.2.1
From the WinSCP windows-type file explorer I select Open Terminal icon and I get a dialog box with the following messages:
  Searching for host...
  Connecting to host...
  Authenticating...
  Using username "[username]"
  Authenticating with pre-entered password
  Authenticated
  Starting the session
After about 15 seconds I get a dialog box that says "Host has not answered for more than 15 seconds.  Still waiting [blah, blah, blah...]  Warning ..."  So I wait for several minutes and no response.
My question is 1; should a console be available in this environment? and 2; if so, where else could I look for possible resolution to this problem?
Thanks in advance,
ken