This is probably this know issue that we unfortunately do not have a solution for:
By using LocalSystem as the Identity of the web site's Application Pool, I made it work on my desktop (Windows 7 Pro 64bit). However,the same setting could not make the same code work on Windows Server 2008 R2 and Windows Server 2012 R2.
The Windows Task Manager shows WinSCP.exe is actually started on the server by the System account when the code is executed in the web application, but it won't create the session to the FTP server. The exception message is
"Timeout waiting for WinSCP to respond - WinSCP has not responded in time (response log file C:\TEMP was not created). This could indicate lack of write permissions to the log folder or problems starting WinSCP itself."
I already double check the C:\temp folder existed on the server and user has write permission on the C:\Temp folder.
Any update on this bug?