This has nothing to do with CWD vs cd. CWD is FTP protocol command. cd is a common command in command-line FTP clients (both Windows ftp and WinSCP) that internally maps to CWD.

The problem is that WinSCP does not work well with non-Unix-like systems, like yours:
https://winscp.net/tracker/49
https://winscp.net/eng/docs/faq_mainframe

FTP server supports the CD command but does not recognize the CWD command. This may be a duplicate problem. If WinSCP is using the CWD command is there a way to have it issue a CD command instead?

Here are back to back examples - Windows native FTP client followed by winscp.com's output. I'm stuck on what I'm doing wrong:

C:\Util>ftp 192.168.0.7
Connected to 192.168.0.7.
220-FTPR6 XXX FTP XX XXXXXX at XXXXXXXXXXXXXXXXXXXXX, 17:15:17 on 2019-09-28.
220 Connection will close if idle for more than 5 minutes.
500 unknown command OPTS
User (192.168.0.7:(none)): garry
331 Send password please.
Password:
230 GARRY is logged on. Working directory is "GARRY.".
ftp> ls
200 Port request OK.
125 List started OK
TSOMSTR.ONLY.ASM
TSOMSTR.ONLY.DOC
TSOMSTR.ONLY.IKJXDLPA.DISASM
TSOMSTR.ONLY.LISTASM
TSOMSTR.ONLY.LISTLOAD
TSOMSTR.ONLY.LOAD
TSOMSTR.ONLY.OBJ
250 List completed successfully.
ftp: 2687 bytes received in 0.20Seconds 13.11Kbytes/sec.
ftp> bye
221 Quit command received. Goodbye.
----------------------
C:\Util>winscp
winscp> open ftp://192.168.0.7
Prompting for credentials...
Username: garry
Connecting to 192.168.0.7 ...
Connected with 192.168.0.7. Waiting for welcome message...
Password:
Connected
Starting the session...
Reading remote directory...
Session started.
Active session: [1] 192.168.0.7
winscp> ls
Error listing directory ''GARRY.''.
Could not retrieve directory listing
CWD cmd failed : EDC5129I No such file or directory.
(A)bort, (R)etry, (S)kip: Abort