diff --git a/auth-passwd.c b/auth-passwd.c
index 997daa025..fb9850204 100644
--- a/auth-passwd.c
+++ b/auth-passwd.c
@@ -326,7 +326,7 @@ sys_auth_passwd(struct ssh *ssh, const char *password)
 			*/
 			error("password for user %s has expired", authctxt->pw->pw_name);
 		else {
-			debug("Windows authentication failed for user: %ls domain: %ls error:%d", user_utf16, udom_utf16, GetLastError());
+			debug("Windows authentication failed for user: %ls domain: %ls error:%d", unam_utf16, udom_utf16, GetLastError());
 
 			/* If LSA authentication package is configured then it will return the auth_token */
 			sys_auth_passwd_lsa(authctxt, password);
diff --git a/contrib/win32/win32compat/misc.c b/contrib/win32/win32compat/misc.c
index 36fd8bedc..5bd32870d 100644
--- a/contrib/win32/win32compat/misc.c
+++ b/contrib/win32/win32compat/misc.c
@@ -1638,6 +1638,37 @@ chroot(const char *path)
 	return 0;
 }
 
+/*
+ * Am I running as SYSTEM ?
+ * a security sensitive call - fatal exits if it cannot definitively conclude 
+ */
+int 
+am_system()
+{
+	HANDLE proc_token = NULL;
+	DWORD info_len;
+	TOKEN_USER* info = NULL;
+	static int running_as_system = -1;
+
+	if (running_as_system != -1)
+		return running_as_system;
+
+	if (OpenProcessToken(GetCurrentProcess(), TOKEN_QUERY, &proc_token) == FALSE ||
+		GetTokenInformation(proc_token, TokenUser, NULL, 0, &info_len) == TRUE ||
+		(info = (TOKEN_USER*)malloc(info_len)) == NULL ||
+		GetTokenInformation(proc_token, TokenUser, info, info_len, &info_len) == FALSE)
+		fatal("unable to know if I am running as system");
+
+	if (IsWellKnownSid(info->User.Sid, WinLocalSystemSid))
+		running_as_system = 1;
+	else
+		running_as_system = 0;
+
+	CloseHandle(proc_token);
+	free(info);
+	return running_as_system;
+}
+
 /* returns SID of user or current user if (user = NULL) */
 PSID
 get_user_sid(char* name)
diff --git a/contrib/win32/win32compat/misc_internal.h b/contrib/win32/win32compat/misc_internal.h
index 376755f5a..24fa9001a 100644
--- a/contrib/win32/win32compat/misc_internal.h
+++ b/contrib/win32/win32compat/misc_internal.h
@@ -52,4 +52,5 @@ int load_user_profile(HANDLE user_token, char* user);
 int create_directory_withsddl(wchar_t *path, wchar_t *sddl);
 int is_absolute_path(const char *);
 int file_in_chroot_jail(HANDLE, const char*);
-PSID get_user_sid(char*);
\ No newline at end of file
+PSID get_user_sid(char*);
+int am_system();
diff --git a/contrib/win32/win32compat/win32_usertoken_utils.c b/contrib/win32/win32compat/win32_usertoken_utils.c
index b8f023ffd..0b1133773 100644
--- a/contrib/win32/win32compat/win32_usertoken_utils.c
+++ b/contrib/win32/win32compat/win32_usertoken_utils.c
@@ -51,6 +51,7 @@
 #include "misc_internal.h"
 #include "lsa_missingdefs.h"
 #include "Debug.h"
+#include "inc\pwd.h"
 
 #pragma warning(push, 3)
 
@@ -307,6 +308,7 @@ done:
 }
 
 HANDLE generate_sshd_virtual_token();
+HANDLE generate_sshd_token_as_nonsystem();
 
 HANDLE
 get_user_token(char* user, int impersonation) {
@@ -319,13 +321,28 @@ get_user_token(char* user, int impersonation) {
 	}
 
 	if (wcscmp(user_utf16, L"sshd") == 0) {
-		if ((token = generate_sshd_virtual_token()) != 0)
+		/* not running as system, try generating sshd token as admin */
+		if (!am_system() && (token = generate_sshd_token_as_nonsystem()) != 0)
 			goto done;
-		debug3("unable to generate sshd virtual token, falling back to s4u");
+			
+		if ((token = generate_sshd_virtual_token()) == 0)
+  		    error("unable to generate sshd virtual token, ensure sshd service has TCB privileges");
+
+		goto done;
+	}
+
+	if (!am_system()) {
+		struct passwd* pwd = w32_getpwuid(0);
+		if (strcmp(pwd->pw_name, user) == 0)
+			OpenProcessToken(GetCurrentProcess(), TOKEN_ALL_ACCESS_P, &token);
+		else
+			debug("unable to generate user token for %s as I am not running as system", user);
+
+		goto done;
 	}
 
 	if ((token = generate_s4u_user_token(user_utf16, impersonation)) == 0) {
-		error("unable to generate token for user %ls", user_utf16);
+		debug3("unable to generate token for user %ls", user_utf16);
 		/* work around for https://github.com/PowerShell/Win32-OpenSSH/issues/727 by doing a fake login */
 		LogonUserExExWHelper(L"FakeUser", L"FakeDomain", L"FakePasswd",
 			LOGON32_LOGON_NETWORK_CLEARTEXT, LOGON32_PROVIDER_DEFAULT, NULL, &token, NULL, NULL, NULL, NULL);
@@ -346,6 +363,12 @@ int
 load_user_profile(HANDLE user_token, char* user)
 {
 	wchar_t * user_utf16 = NULL;
+
+	if (!am_system()) {
+	    debug("Not running as SYSTEM: skipping loading user profile");
+	    return 0;
+	}
+
 	if ((user_utf16 = utf8_to_utf16(user)) == NULL) {
 		fatal("out of memory");
 		return -1;
@@ -476,6 +499,33 @@ InitUnicodeString(PUNICODE_STRING dest, PWSTR source)
 	dest->MaximumLength = dest->Length + 2;
 }
 
+HANDLE generate_sshd_token_as_nonsystem()
+{
+	/*
+	 * This logic tries to reset sshd account password and generate sshd token via logon user
+	 * however this token cannot be used to spawn child processes in typical interactive 
+	 * scenarios, without modifying ACLs on desktop station. 
+	 * Since sshd is run in interactive mode primarily for debugging/testing purposes, we are
+	 * simply returing the process token (to be used for spawning unprivileged worker)
+	 {
+	    UUID uuid;
+	    RPC_CWSTR rpc_str;
+	    USER_INFO_1003 info;
+	    HANDLE token = 0;
+	    UuidCreate(&uuid);
+	    UuidToStringW(&uuid, (RPC_WSTR*)&rpc_str);
+
+	    info.usri1003_password = (LPWSTR)rpc_str;
+	    NetUserSetInfo(NULL, L"sshd", 1003, (LPBYTE)&info, NULL);
+
+	    LogonUserW(L"sshd", NULL, (LPCWSTR)rpc_str, LOGON32_LOGON_INTERACTIVE, LOGON32_PROVIDER_DEFAULT, &token);
+	}
+	*/
+	HANDLE token = 0;
+	OpenProcessToken(GetCurrentProcess(), TOKEN_ALL_ACCESS_P , &token);
+	return token;
+}
+
 HANDLE generate_sshd_virtual_token()
 {
 	SID_IDENTIFIER_AUTHORITY nt_authority = SECURITY_NT_AUTHORITY;
diff --git a/contrib/win32/win32compat/wmain_sshd.c b/contrib/win32/win32compat/wmain_sshd.c
index 8a14c705d..a210195e1 100644
--- a/contrib/win32/win32compat/wmain_sshd.c
+++ b/contrib/win32/win32compat/wmain_sshd.c
@@ -103,9 +103,7 @@ static VOID WINAPI service_handler(DWORD dwControl)
 static void 
 generate_host_keys()
 {
-	TOKEN_USER* info = NULL;
-	DWORD info_len = 0, dwError = 0;
-	HANDLE proc_token = NULL;
+	DWORD dwError = 0;
 	UUID uuid;
 	RPC_CWSTR rpc_str;
 	USER_INFO_1 ui;
@@ -114,13 +112,8 @@ generate_host_keys()
 	PROCESS_INFORMATION pi;
 	wchar_t cmdline[MAX_PATH];
 
-	if (OpenProcessToken(GetCurrentProcess(), TOKEN_QUERY, &proc_token) == FALSE ||
-	    GetTokenInformation(proc_token, TokenUser, NULL, 0, &info_len) == TRUE ||
-	    (info = (TOKEN_USER*)malloc(info_len)) == NULL ||
-	    GetTokenInformation(proc_token, TokenUser, info, info_len, &info_len) == FALSE)
-		goto cleanup;
 
-	if (IsWellKnownSid(info->User.Sid, WinLocalSystemSid)) {
+	if (am_system()) {
 		/* create sshd account if it does not exist */
 		UuidCreate(&uuid);
 		UuidToStringW(&uuid, (RPC_WSTR*)&rpc_str);
@@ -146,11 +139,6 @@ generate_host_keys()
 			CloseHandle(pi.hProcess);
 		}
 	}
-cleanup:
-	if (proc_token)
-		CloseHandle(proc_token);
-	if (info)
-		free(info);
 }
 
 /*
@@ -259,13 +247,13 @@ int wmain(int argc, wchar_t **wargv) {
 	wchar_t* path_utf16;
 	argc_original = argc;
 	wargv_original = wargv;
-
+	
 	/* change current directory to sshd.exe root */
 	if ( (path_utf16 = utf8_to_utf16(w32_programdir())) == NULL) 
 		return -1;
 	_wchdir(path_utf16);
 	free(path_utf16);
-	
+
 	if (!StartServiceCtrlDispatcherW(dispatch_table)) {
 		if (GetLastError() == ERROR_FAILED_SERVICE_CONTROLLER_CONNECT)
 			return sshd_main(argc, wargv); /* sshd running NOT as service*/