The shell session does not work, because you seem to be using some strange shell. WinSCP needs bash or similar.
This is a new web host I'm connecting to, so not sure what strange shell might be used. When connected using Putty I tried:
$ echo $0
*** forbidden path: /bin/dash
$ echo $SHELL
*** forbidden path: /usr/bin/lshell
So don't have access to that.
I've been using WinSCP for many years on several hosts but haven't had this problem before, I've opened a ticket with the hosting company to see what they have to say.