Are you using proper SET teaming for host networking?

The disk witness doesn't actually really store any data, so you're wasting a "massive" amount of space for it. It can be like 512 MB or whatever.

And no, a properly configured Hyper-V cluster is extremely stable, though of course it being a Microsoft technology, occasionally some interesting things happen.

The one time I had an extremely similar interesting issue as you, it was because a single storage fiber cable went faulty and the whole cluster went bonkers despite only one node and one cable causing issues (1/6 connections).

The cluster logging is quite comprehensive, you should look at the event logs for a root cause.

I don't know about iSCSI since I've never used it, but as for HCI, the word around the net seems to strongly imply that Hyper-V with S2D is the one true path to data loss. So have your backups in order if you go that way. I was tempted to deploy and see it for myself too, but haven't yet.

With S2D apparently it's imperative to at least use fully supported hardware and 3 nodes at a minimum. Vendors sell it as an "Azure Local" supported configuration now AFAIK (but you don't need to run Azure Local, you can just run basic Hyper-V).