Sshd will spawn processes that deal with individual connections so even though you stop the service there may still be sshd processes running. The way to tell if your sshd daemon is stopped is to run a netstat -a | find "ssh" | find "LISTEN". This will only find sshd processes that are listening for new connections and not the ones that are established to deal with existing ssh connections.
I've experienced connection problems from time to time with sshd on cygwin. Almost always this is either due to high load on the receiving server and it just can't handle it, or a problem with the network connection. Are your connections all on the LAN or WAN? -- Unsubscribe info: http://cygwin.com/ml/#unsubscribe-simple Problem reports: http://cygwin.com/problems.html Documentation: http://cygwin.com/docs.html FAQ: http://cygwin.com/faq/
