researching it, it turned out he got a 550 response back from a SIZE command
  and then I fell over the text in RFC3659 that says:

   The presence of the 550 error response to a SIZE command MUST NOT be taken
   by the client as an indication that the file cannot be transferred in the
   current MODE and TYPE.

  In other words: the change I did on September 30th 2008 and that has been
  included in the last two releases were a regression and a bad idea. We MUST
  NOT take a 550 response from SIZE as a hint that the file doesn't exist.