Your comments

Sorry, we will not add such options to clutter the user interface for a function that 99% of our users will never need. I am afraid that the config option is your only solution. Thank you nevertheless.

The error just means that the server failed to provide a response.
That can happen with there is a PHP error but PHP is configured not to show errors (display_errors is set to Off in the PHP configuration).
You can check the FileRun control panel user activity logs for a possible log entry that might contain the PHP error message. If there isn't any, you would need to check the PHP error log.
The first step though would be to check the FileRun settings, particularly the e-mail settings and the configured SMTP account, to see if they are correct, and perform a test from the same place.

If you are having these troubles with pictures, the only difference is that pictures have thumbnails. If you disable thumbnails, from the FileRun control panel, things would probably improve.
Your description of the problem was not accurate. You said it took 2-3 minutes to show the list of files. From your additional details I understand now that it probably took 2-3 minutes to show the thumbnails for all your files in the folder.
If that was the first time you opened that folder, it might be normal, depending on how slow your server is. Generating hundreds of thumbnails will take time and it's normal.
After the initial load, then listing a folder, with or without thumbnails, it should take less than a second.
Some servers are slow because of slow hardware and then no software will help that. In those cases, the only solution is to play with the FileRun thumbnail settings (which are many) and either have the thumbnails generated from the command line beforehand, or disable the generation of the thumbnails by having FileRun use the files directly for preview.

$config['search']['limit_file_size'] = 10485760;

That's the default value of the size limit. See this page for details on how to create a config file, where to place and edit the above.

The folder you assigned as the user's home folder, that's the folder where you need to fix the permissions, so that PHP can make changes to it.

A company with 220 users might want to invest in getting professional support rather than hope for free help from strangers on forums.
Good luck to you as well! 

There should be no client appearing anywhere. No need to manually do anything. Only perhaps a signed in session under the user's account settings panel.

Roger above has a different type of issue, with the HTTP server rejecting some WebDAV related requests (such as PROPFIND). Your issue seems client not server related.

How does the filename look in the filesystem, after uploading via FileRun's web interface? Does it look in Windows Explorer identical to how it looks in FileRun's web interface?

You would need to run a newer PHP version on your Windows server. Older PHP versions on Windows do not have support for multibytes characters in filenames.

Go with 7.3.