I wanted to add a possible solution for people Googling to this issue. Although not related to your issue OP, the title maybe bring people here with a similar problem caused by a VPN.

I have Private Internet Access VPN, but when it's connected I cannot load remote directories. When I disconnect from the VPN everything is fine. I worked with a guy in support at PIA and he says there was nothing I could do. No big deal for me I only use VPN to geolocate to watch the BBC iPlayer from the US. It just means I can't watch TV and webdev at the same time. Probably a good thing :).

Thanks for sharing your solution!

martin wrote:

Schuml wrote:

I even modified it to go to a directory that had one file but it still would list that directory.

Would or wouldn't?

It would not, sorry for my mistype. However I figured out the Issue which was quite odd, I have never had to do this correction to a PC before. After comparing a working PC to the non working PC I discovered it was a MTU issue on the PC. I manually lowered the MTU setting to match my DSL at 1492 and everything started working correctly.

Schuml wrote:

I even modified it to go to a directory that had one file but it still would list that directory.

Would or wouldn't?

No Basic commands that dont try and read the directory seem to work fin as soon as you type ls it just sits there trying to read the directory and never lists what is in the directory. I get the same basic thing in WINSCP I set the time out for 60 seconds and it just keeps retrying but never lists the directory. I even modified it to go to a directory that had one file but it still would list that directory.

Do other commands works in PuTTY? Particularly commands with lot of output (as ls).

I had this same issue with a windows 8 Machine, I gave up on that machine. However now I am being issued a new laptop that has the same problem. The issue is that I can login and authenticate with no problem. However in WINSCP and Putty they both error reading the remote directory. WINSCP simply just keeps timing out and in Putty after authenticating and I type the command ls -l to list the current directory it just sits there and doesn't do anything. The old laptop that I have is configured exactly the same way and is on the same network and it works perfectly. The only thing that I can see is different is the new machine has a 1/2 TB hard drive and I am wondering if that is what is causing my issue. the 8.1 machine that I had similar problems with had a larger local drive as well.