Deduplication

What method does WINSCP use to copy files? Can it handle deduplication files?

I do not understand your questions. What kind of "method" do you refer to? What is the "deduplication file"?

Deduplication is used by our Windows 2012 server. Deduplication is a specialized data compression technique for eliminating duplicate copies of repeating data. Here's a link that explains it better:

https://techcommunity.microsoft.com/blog/filecab/introduction-to-data-deduplication-in-windows-server-2012/424257

While I admit not to read complete article, the key point is:

Applications and end users will not know that the data has been transformed on the disk and when a user requests a file, it will be transparently served up right away

I do not think there's anything specific WinSCP needs to do to work with deduplicated volume.

Anyway, I appreciate if you provide some feedback once you try.