ChrootDirectory help

I am trying my hand at building a SFTP server
to replace an FTP server at the company I work
for. Because the FTP server was chrooted the
powers that be want the SFTP server to likewise
be chrooted. I was happy to see that the latest
OpenSSH does this but I am having a problem
getting it to work. When I try to login to my
test acount, I get an error message:

Fatal: unable to initialise SFTP: could not connect

The home folder for the test user is setup to:
drwxr-x--- 3 root test 512 May 23 16:21 test

This user's shell is set to: /sbin/nologin

The /etc/ssh/sshd_config file has been modified to

Subsystem sftp internal-sftp
Match User test
ForceCommand internal-sftp
ChrootDirectory %h

I am sure that I am just missing something. Could
someone point me in the right direction.

thank you.

PS I have looked in the archive, googled, and read
the man pages. If the answer is out there, I missed

Stuart van Zee

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