How does the authentication look in GUI? Can you see the "password" when typing it or do you see dots?
Please attach a full log file from a successful (if possible) authentication in GUI (using the latest version of WinSCP).
To generate log file, enable
logging, log in to your server and do the operation and only the operation that causes the error. Submit the log with your post as an attachment. Note that passwords and passphrases not stored in the log. You may want to remove other data you consider sensitive though, such as host names, IP addresses, account names or file names (unless they are relevant to the problem). If you do not want to post the log publicly, you can mark the attachment as private.