Check out the original tip on Compiling OpenSSH on Ubuntu 7.04 Feisty Fawn Server.
You're very welcome, and yes, you missed a small step. Your working directory should be '/etc/init.d' and you should perform this step.
Download the file 'ssh' from www.lostcreations.com. This new file is edited so that all hardcoded references to the Ubuntu repository version of OpenSSH are replaced with variables and those variables are set to the new version of OpenSSH.
'sudo wget http://www.lostcreations.com/~akutz/openssh-4.6p1/ssh; chmod +x ssh'
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