I agree with Martin that it may not be a client bug, but a server one.

Servers can act differently with different clients as each client doesn't do things 100% the same as another client, and the server has to deal with that. Could be the command line connection gets something in the server code one way like temporarily improves a value being held in server code. Difficult to say.

If anything, install an older version of WinSCP and check again, but even this could still mean the server is at fault if both versions do something that could be considered correct in either case. That's the real thing there. Which side is correct and which side isn't.

I can see in the log that WinSCP has asked the server to rename /apps/pms_v1/backend/storage/app to /apps/pms_v1/backend/storage/app1. That seem all right to me. I do not think the problem is on WinSCP side (or can you rename the file using any other SFTP client?). By mv command, I assume you mean shell command, not WinSCP scripting command, right? As a fallback solution, you might try using SCP protocol with WinSCP for the rename. Or setup a custom command to run the shell mv.

I've been using WinSCP for many years. For a few days now, I haven't been able to rename folders using the GUI. Files still work. If I rename the folder directly via the command line using the mv command, it works. The strange thing is that I can then rename this folder using the GUI as well. The log file is attached. Renaming starts at line 400.