i am unfamiliar with the software you are using, but ssh1/scp1 coupled with the term "compatibility mode" sounds like the protocol version error with ssh? Perhaps your ssh server only allows ssh v2 (which is good) but your client may not support ssh v2.

Check the SSH server config and see if it allows v1 and v2, and check your client to see what it's compatible with. Maybe your client has to be specifically told to negotiate ssh v2 with a command line option (if it's graphical, there should be a setting for that also).

I wouldnt change the ssh server to allow v1 if it doesnt already. v2 is the way to go.