In case you still haven't figured it out - I ran into similar issues and in my case it turned out to be permission problems on several directories.
I followed the instructions from http://www.tux.org/~mayer/cygwin/cygwin_sshd.pdf (section on "Cygwin binaries permissions wrong") and after changing permissions as instructed there I was able to log on again. HTH! -- View this message in context: http://cygwin.1069669.n5.nabble.com/Connection-to-Cygwin-sshd-fails-with-Operation-not-permitted-bash-works-fine-on-mintty-tp92696p96050.html Sent from the Cygwin list mailing list archive at Nabble.com. -- Problem reports: http://cygwin.com/problems.html FAQ: http://cygwin.com/faq/ Documentation: http://cygwin.com/docs.html Unsubscribe info: http://cygwin.com/ml/#unsubscribe-simple
