Reinstalled this beta and set the timeout to 2 minutes.
Same thing: Jun 29 17:00:19 dropbear[2933]: Exit (user-name): Idle timeout
Now for the good news: In WinSCP, if you set the Keepalive setting to "Executing dummy protocol commands" then there's no timeout.
With the standard "Sending of null SSH packets" the timeout happens.
I have to verify it but I'm sure dropbear is drop dead in it's detection of SSH usage...
Also, since this timeout is new, could there be a setting in the UI for it?
Edit: I can confirm the WinSCP Keepalive setting "Executing dummy protocol commands" prevents the timeout.
I have not found a solution for Xshell 5, which has an option to send a string when network is idle. You have to enter the string. I tested it with \r which is an enter command and it keeps the connection alive. But of course the string is wrong, there must be a silent command to add.
In that case it might need to be looked into by the Dropbear author, since this is handled by dropbear itself.