Ok, I might be as dumb as a post, but I am having some problems getting chroot to work with sftp. I got it working great with plain ftp but sftp doesn't really want to cooperate. I have looked at countless websites that haven't really been all that much help. I read the man pages and the info page and that was about as clear as mud. So I really need some help. This is what I have tried so far.
I found a doc that I thought laid it out. The ftp daemon that I am using is vsftp so I followed the instructions on setting up chroot.

For a sftp chroot
1. get a copy of ssh2 3.2.5 or new. - Done and installed
2. backup original ssh then copy ssh2 files into their place - Done
( these files include - ssh, ssh-add, ssh-agent, ssh-keygen, ssh-askpass ) I have tripple checked these to make sure they are right.
3. vi /etc/ssh2/sshd2_config
ChRootGroups ftpusersgroup
subsystem-sftp internal://sftp-server
4. service xinetd restart

Then I try to sftp and it still shows my entire path (/data/ftp/user) rather than seeing the home dir as root (/).

I have tried restarting the entire server and even putting specific users in the list as ChRootUsers with no luck. Can anyone tell me what I am doing wrong?

Any help at all would be very welcome. Thanks