DiffieHellmanGroupExchangeSHA1 key exchange could be a problem because there are two variants - a standard variant (where client specifies minimum, maximum and desired DH key size) and a legacy variant (where the client only specifies the desired DH key size). Modern servers support the standard variant, and some of them support the legacy variant, but some legacy servers only support the legacy variant. We try to guess the variant used according to multiple criteria, but this could never be entirely reliable.
Looking into the log again, I can confirm that DiffieHellmanGroupExchangeSHA1 was actually attempted. However, I now noticed that the client actually asked for a group exchange with a 512-bit key. This is definitely not secure, and it seems to have been set by a custom code because the default value here is 1024.
It's quite possible the server rejected the key exchange attempt because it rightly considered 512 bits to be too low.
Please make sure you are NOT doing something like this in your code:
sftp.Settings.SshParameters.MinimumDiffieHellmanKeySize = 512
The log also shows that the server only supports two key exchange methods that are both based on SHA-1 ("diffie-hellman-group-exchange-sha1" and "diffie-hellman-group14-sha1"), which means that SHA-1 was almost certainly not the cause of refused connection attempts.