No that is not the issue... I have already tried that and made sure that i am using the full name ie website1ftp1, and the right password... also tried the different transfer settings : default / active / passive and none of them work.
I get the same response all the time
Response: fzSftp started
Command: open "firstname.lastname@example.org" 22
Command: Pass: ********
Error: Authentication failed.
Error: Critical error
Error: Could not connect to server
thats why it makes me think that the pureftpd is not looking at the same folder that the the ispconfig creates the usernames and passwords for ftp.