Unable to start SSH session to windows Container using Windows built-in SSH Server

I seem unable to have WinSCP to connect to a Windows Container with the default SSH Server configured.

I can manually start an SSH session from PowerShell, so I can confirm SSH server is listening and working.

I can tell from the logs that WinSCP is properly authenticating and even reading the remote shell input.

It then seems to be sending this to the shell:
And keeps waiting forever for a response to this command, yet it seems to be receiving it:
It keeps waiting forever for this one additional byte, terminating finally with the message:

I have tried all of the following:

• Using OpenSSH on server (https://community.chocolatey.org/packages/openssh#versionhistory) instead of the built-in SSH server
  
• Changing the bash https://learn.microsoft.com/en-us/windows-server/administration/openssh/openssh_server_configuration to sh or bash
  

None of them seem to work either.

All of them will let me start an SSH session both from the Windows integrated SSH client and from PuTTY.

Finally got it working, I had to set "SFTP Server" option to "sftp-server", looks like by default it will be trying to start an sftp-server executable on a wrong path.

Check you server's sshd_config. It probably has a wrong path to sftp-server.

After further investigation I found that the default installations of OpenSSH on Windows (both the Chocolatey OpenSSH or the SSH that comes bundled as a Windows feature) will NOT configure the sftp Subsystem.

It would be nice to have that in the instructions:
https://winscp.net/eng/docs/guide_windows_openssh_server

I find that very unlikely.
For example the default sshd_config for Win32-OpenSSH is
https://github.com/PowerShell/openssh-portable/blob/latestw_all/contrib/win32/openssh/sshd_config