I am running Red Hat 5.3 and had a request to setup a user for sftp, and I want to lock the login id to the home directory, just as I am doing for normal ftp using vsftpd...

I added the line: ftpleaps /home/ftpleaps
to the /etc/security/chroot.conf file.
Added the line:
session required pam_chroot.so debug
to the /etc/pam.d/sshd file.

And created the user, ftpleaps that will be using sftp...

Using this ID I can sftp into teh server just fine, but I am still able to change to different directories, I'm not locked into just the home directory...

Any ideas as to what I may be missing ??

Coincidentally I've been working on the same thing. (chroot sftp).

I'd tried Jailkit which looked promising but it is only really documented for Debian so I had issues.

Now I'm on my way to doing rssh instead.
Reading the 4 articles in this series will likely get you going though I haven't finished my own implementation yet so won't guarantee it.
At least it ought to save you some time on research though.
http://www.cyberciti.biz/tips/rhel-c...ssh-shell.html

By the way apparently there is a newer openssh in the world that will have built in sftp restriction capbality. Also supposedly that newer version is in the 5.4 beta. I haven't explored that yet but if you wanted to you could probably download the new stuff and compile it yourself. I chose not to do it because I'd prefer to keep things as close to RHEL standard as possible.