Original von equimax
Using KDE 3.1 and FreeBSD 4.8 (starting KDE using startx.) When I try to connect to an SFTP site by entering SFTP://mysite.com in Konqueror, I get the error: "Error encountered while talking to SSH." Then I click on OK and get the error "Could not connect to host localhost. "
This same behavior occurs when I try to connect using Kbear in SFTP mode. SFTP from the command line works fine.
Just guessing, but one thing you could check: Do you have any verbose output in the rc files (anything that gets executed on login) on the host you connect to, like a fortune being printed? That broke sftp for me once while ssh still worked.
But then again sftp on the command line didn't work for me either, so it doesn't fit your description exactly and maybe it's not the same problem. OTOH you can easily check it by commenting out the lines so I thought I'd tell my tale anyway.