The SSHD port has always been a bit rough around the edges. Make sure your TERM setting is something reasonable, whatever the documentation recommends or perhaps 'os2'.
Also see what your login shell is: CMD, TNPIPE, or VIOROUTE. If one of those doesn't work well, try one of the others. (I always found TNPIPE seemed to work most smoothly, but it has some limitations.)