The "The file exists" is not WinSCP error. I do not even see it in your code. Where does it come from?
If the error is not from WinSCP it must be an internal PowerShell error of the Move-Item command. After the SCP transfer the files get moved from a intermediary directory to the final one. I case a file was transferred already once before and an application puts a write lock on it, the move should fail. I tried that artificially and received a similar error message but not the very same.
Thanks for the confirmation that the error is not one of WinSCP. :)