First, read [link|http://tech.erdelynet.com/cygwin-sshd.html|this]. Michael\r\nErdley's SSHD on Cygwin page an excellent howto on the topic, I've used\r\nit on multiple machines.

For the permissions thing, a few points:

\r\n\r\n
• SSH is insanely (or sanely) finicky about filesystem security. So\r\nyou need to get your permissions set right on a number of files,\r\nincluding public and private keys, configuration files, and a few other\r\nthings. Set your client to verbose, and check the server (XP) logs for\r\nany possible clues.
\r\n\r\n
• SSH under Cygwin in NOT secure against local\r\nexploitation. The local cygwin.dll provides a shared memory\r\nspace, which any local users (or processes) can access. The Cygwin docs\r\ndo mention this, but thought I'd remind y'all. Still, for\r\nproviding authentication and security on the wire, a reasonable choice.
\r\n\r\n
• I think I've seen this problem before. I'm trying to remember what\r\ncaused/resolved it...
\r\n\r\n
• ...which may well have been "simple file sharing" under the legacy\r\nMS Windows File Exploder (pedantic: Windows Explorer) preferences.\r\nEither "Tools" or "View" menu, IIRC. Deselect this option. As a second\r\ncheck if that didn't make sense, right clicking on a file when the\r\noption is deselected will give you a "security" properties tab, when the\r\noption is selected, this tab is missing. Note that the\r\npreference says "recommended". Bollux. [link|http://www.annoyances.org/|Annoyances.org] doesn't mention it\r\nthat I can find, here's [link|http://www.jimthompson.net/xphome/File_Sharing.htm|an article]\r\nwith some additional info. I think that's the trick.
\r\n\r\n

If that didn't work, I'll fax you your dollar back.

...[link|http://twiki.iwethey.org/twiki/bin/view/Know/CygwinSshCantAccessShares|this] at TWikIWeThey.