In order to install openssh server correctly for Windows 7, you will need to do the following:

  1. Install Cygwin in the normal way. Make sure you’ve got openssh and cygrunsrv as selected packages to install.
  2. Right-click the Cygwin shell icon, and Run as administrator.
  3. Run ssh-host-config. Follow the prompts carefully: if needed, it will tell you which permissions you need to set and where. Remember to say yes to privilege separation: it will create a user for you called cyg_runsrv which all cygwin services will run under in Windows 7.
  4. You should be able to start the service using cygrunsrv –-start sshd, or by starting it as a normal service under Administrative Tools > Services.
  5. This does not automatically create and open firewall rules, so you will have to do this manually.