I've got the opposite problem. Every once in a while, the host sends an
XOFF to PuTTY but never sends the corresponding
XON to PuTTY. In this case, nothing you do to PuTTY (short of restarting it) will unwedge it. In this case, all keyboard input to the host is blocked, but the host can still send data to PuTTY.
Disabling flow control in PuTTY doesn't work.
The way to fix this problem is to use
in your .profile. This prohibits the host from sending
XOFF. Note that the names of the options are totally confusing.
-ixon means enable/disable flow control on the client side (meaning that the client can't issue flow control),
-ixoff means enable/disable flow control on the host side (meaning the host can't issue flow control).
Btw, the ASCII code for Ctrl-S and XOFF are the same ASCII character (code 19, 0x13). There's no difference. The settings change the interpretation of that ASCII character.