I have tested the KpyM SSH Server. It indeed does not support UTF-8 encoding of file names. Unfortunately, it does not identify itself in any way, so I cannot add it to a black list to make WinSCP fall back to Windows encoding. The server uses "cryptlib" signature of it's underlying SSH library. But that has nothing to do with the filename encoding itself. The other SFTP servers using the same cryptlib library may perfectly support UTF8.

Thanks for your report.
I believe it's about a time to expect that all servers runs on UTF-8. That was a reason for a change in 5.2.5 beta. Apparently your server does not. Let me check it. I'll come back to you.

Hi! Recently I've installed WinSCP 5.2.5 beta and noticed it don't show file names with Russian in directory listings when I use SFTP. Previously it worked well. Today I've installed 5.2.6 beta and nothing changed.

My investigation shows it's because "Auto" setting in "UTF-8 encoding for filenames" is selected by default. When I choose "Off", WinSCP shows file names with Russian in listings. "On" setting works like "Auto". This means starting with version 5.2.5 WinSCP incorrectly detect encoding.

Server is KpyM Telnet/SSH Server (KTS) running on Windows XP SP3 Home.