Actually guys, I have found the problem. For some strange reason, when trying to start the script from cywgin, the root password is altered. If I start the service from the windows control panel under 'services' and change the log-in properties of the cygwin sshd service, I see that the password is incorrect. After correcting the password, I am able to successfully start the service ONLY from the 'service' control panel. I was also able to ssh into the Windows image from my management node so that indicates the cygwin sshd service is working correctly.
Thanks again for all your help guys, I will probably be back before you know it with more questions :)