Hi,
As far as I understand, the Xon/Xoff protocol is handled by the low level serial driver, not the VISA driver.
I wrote a couple of VI to test it. The Tx.vi send data as fast as it can as checks if the Rx.vi has sent the Xoff character. The Tx.vi is not configured for Xon/Xoff, so it will read off the Xoff character. After running the Tx.vi for a little while (about 100 iterations) the driver will send the Xoff character.
Hope this helps.
DiegoF
National Instruments.