You are using an SFTP protocol. The
"Shell" settings has no effect on SFTP operations. If it did work before, you could not have used SFTP. Maybe the server did not support SFTP (or your configured SFTP server path was invalid), and WinSCP was falling back to legacy SCP protocol all the time. And the SFTP suddenly started working, bypassing the
"Shell" settings.
See
https://winscp.net/eng/docs/faq_su