Not able to login by PuTTY Network Error

Question

I have reset the user ("sftuser"), after that I am unable to login to the server, its throwing an error when logging in using putty:

PuTTY Network Error: Software caused connection abort

I am able to login to other users without any issue.

We don't have any LDAP mechanism to login to set the server its a local user.

/etc/ssh/sshd_config has PAM as yes.

Also for sftp we added the following configuration:

Match Group sftponly
       ChrootDiretory /ftp/sftpuser
       AllowTcpForwarding no
       ForceCommand internal-sftp
       X11Forwarding no

In /etc/passwd:

sftpuser:x:4008:5007::/ftp/sftpuser:/bin/bash

Permissions:

ls -ld /ftp/sftpuser
drwxr-xr-x 3 sftpuser sftponly 4096 Oct 27 18:40 /ftp/sftpuser

ls -ld /ftp
drwxr-xr-x 4 root root 4096 Dec 16 12:27 /ftp

After we reset and login to the putty. We are getting a popup in putty as:

Putty Fatal Error
X Network error:Software caused connection abort

After we press OK in the popup the putty session becomes inactive.