Well, I know that this is a rather old posting. But hey, let's give it a try.
Well can override dymanic timeout management if your file system requests are expected to be less than the minimum value of 14 seconds or longer thatn the maximum value of 60 seconds. The minimum and maximum values can be specified in your config.sys file as follows:
where x is the minimum number of seconds before timeout occurs and y is the maximum number of seconds before timeout occurs.
Since I don't have the above problem myself I can't verify if this solves your login problem. But MFS periodically sends a "heartbeat" call to the server to see if it's alive. It could help you out.
And You might also take a look in c:/ibmlan/ibmlan.ini file. It might just need some tuning there.