Choosing FullRowSelect=1 makes background color in both panels to be gray (WinSCP 5.19.2), as in the screenshot above.
Now I'm using the latest version, which looks ok. At the moment, I've no remote host to connect to, but I'll try to get one and check again.
Are you using the latest version of WinSCP?
Is it just the color? Or is the panel actually disabled (cannot be worked with)?
the background color of the local panel is gray, instead of white. Files and folders are not hidden and are mine.