We found a bug in the legacy .NET CF 1.0 build of Rebex SFTP (v2.0.3484.9). It was in the Monitor.TryEnter replacement routine (which is only present in this version and not in any other build) that made it impossible for a single thread to enter twice. This occurred when SSH session re-negotiation was requested by the server while a transfer or other command sequence was in progress, blocking the thread.
I sent a link to a patch to your e-mail - please give it a try and let me know whether it helps!