I am assuming that you only want to allow sftpuser to access sftp and have no need for other access like allowing adminstrators SSH access.
Modify C:\ProgramData\ssh\sshd_config and verify that you have these statements.
Allow password authentication.
# To disable tunneled clear text passwords, change to no here!
PasswordAuthentication yes
Allow the user to log in.
# Authentication:
Allowusers sftpuser
Enable sftp and force it to the E drive. .
# override default of no subsystems
Subsystem sftp sftp-server.exe -d e:/
Define the user and set his root folder.
Match user sftpuser
ChrootDirectory e:/
Verify that the NTFS permissions on the E drive allow access to the user. Personally, I would use E:\Data or some other folder and not the entire drive.
Recycle the OpenSSH Server service to implement any config changes.
See: https://superuser.com/questions/1549527/how-do-i-restrict-users-to-sftp-in-openssh-on-windows-server https://learn.microsoft.com/en-us/windows-server/administration/openssh/openssh_server_configuration