Scp: ash: /usr/libexec/sftp-server: not found

You meant scp? ssh works without any option here.

In the meantime I compiled for the WSM20 without any errors and scp works without any option.

base-files ca-bundle dnsmasq dropbear firewall4 fstools kmod-crypto-hw-eip93 kmod-gpio-button-hotplug kmod-leds-gpio kmod-nft-offload libc libgcc libustream-mbedtls logd mtd netifd nftables odhcp6c odhcpd-ipv6only opkg ppp ppp-mod-pppoe procd-ujail uboot-envtools uci uclient-fetch urandom-seed urngd wpad-basic-mbedtls kmod-mt7915-firmware luci arp-scan arp-scan-database busybox iperf iperf3 iputils-arping nmap openssh-sftp-server static-neighbor-reports

root@WSM20-K0:~# ubus call system board
{
	"kernel": "6.6.86",
	"hostname": "WSM20-K0",
	"system": "MediaTek MT7621 ver:1 eco:3",
	"model": "Zyxel WSM20",
	"board_name": "zyxel,wsm20",
	"rootfs_type": "squashfs",
	"release": {
		"distribution": "OpenWrt",
		"version": "24.10.1",
		"revision": "r28597-0425664679",
		"target": "ramips/mt7621",
		"description": "OpenWrt 24.10.1 r28597-0425664679",
		"builddate": "1744562312"
	}
}