I connect to an external linux machine via SCP.
I do not encounter the same issue when i try to do the same on the host OS the virtual machine runs on.
It seems that after a very short period of no activity, the connection is closed and when I try to drag and copy a file from the remote machine to the desktop WinSCP freezes for 10 or more seconds until it eventually performs the file copy.
The same issue applies when i copy/move files within WinSCP using the built in file browser.
When I drag a file from the desktop to WinSCP, the copy happens instantly as expected.
So the issue seems to be only happening in one direction but not the other.