If you're using the SFTP button, this feature is only available with SSH2 connections. It uses the encrypted session you've already established to transport file data in a secure way.
If you're using telnet, you could try using the zmodem protocol if your host supports it. Try typing 'rz' or 'sz' at the command line and see what happens. If the host doesn't have it, you could either switch to SSH2 (if the host supports it) or install the rzsz package, which you can find on thet net to support zmodem.
However, zmodem over telnet suffers from the same basic security problem ALL telnet data does. It is sent without any enryption, and so is not a good way to transfer anything sensitive.
ZModem will also work over SSH if your host supports SSH but not SFTP. In fact, ZModem works over all supported connection types (telnet, ssh1, ssh2, dialup, serial) and inherits the security properties (or lack of security) of the medium underneath.
Hope this helps!
Let me know your progress!
Brian Pence
Celestial Software
http://www.celestialsoftware.net