> It appears that there is a known issue with Windows sockets where this 
> type of problem may occur with non-blocking sockets. It is described in 
> the msdn documentation for WSAAsyncSelect()
> (http://msdn.microsoft.com/en-us/library/ms741540%28VS.85%29.aspx).

That documentation doesn't seem to describe the same kind of situation; it is about delayed notification through Windows messages (if you read the sequence they given in example, it's quite logical why it can fail).

Have you tried instrumenting sock_recv_guts() and dumping the actual return values and errnos (from both internal_select() and recv())?