This is happening to me too. I'm running FreeBSD 4.9 with latest patches and OpenSSH 3.7.1 Portable.
If I use the command line sftp on the FreeBSD box, I am able to successfully chmod a file.
Here is a clip from my log:
Copying 1 files/directories to remote directory "/home/web-admin/htdocs/"
PrTime: Yes; PrRO: Yes; Rght: rw-rw----; PrR: Yes; FnCs: N; RIC: Yes; Resume: S (10240); CalcS: Yes
TM: M; AscM: *.*htm*; *.txt; *.php*; *.cgi; *.c; *.cpp; *.h; *.pas; *.bas; *.tex; *.pl; .htaccess; *.xtml; *.css; *.cfg; *.ini; *.sh; *.xml
File: "C:\Documents and Settings\weasel\Desktop\wcs time.txt"
Copying "C:\Documents and Settings\weasel\Desktop\wcs time.txt" to remote directory started.
Ascii transfer mode selected.
Opening remote file.
Type: SSH_FXP_OPEN, Size: 56, Number: 4355
Type: SSH_FXP_HANDLE, Size: 13, Number: 4355
Type: SSH_FXP_WRITE, Size: 169, Number: 4614
1 skipped SSH_FXP_WRITE, SSH_FXP_READ, SSH_FXP_DATA and SSH_FXP_STATUS packets.
Type: SSH_FXP_CLOSE, Size: 13, Number: 4868
Type: SSH_FXP_STATUS, Size: 24, Number: 4868
Status/error code: 0
Type: SSH_FXP_SETSTAT, Size: 56, Number: 5129
Type: SSH_FXP_STATUS, Size: 24, Number: 5129
Status/error code: 0
Listing directory "/home/web-admin/htdocs".
Type: SSH_FXP_OPENDIR, Size: 31, Number: 5387
Type: SSH_FXP_HANDLE, Size: 13, Number: 5387
Type: SSH_FXP_READDIR, Size: 13, Number: 5644
Type: SSH_FXP_NAME, Size: 446, Number: 5644
Type: SSH_FXP_READDIR, Size: 13, Number: 5900
Type: SSH_FXP_STATUS, Size: 28, Number: 5900
Status/error code: 1
Type: SSH_FXP_CLOSE, Size: 13, Number: 6148
Type: SSH_FXP_STATUS, Size: 24, Number: 6148
Status/error code: 0
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