I want to know the risks and dangers of this situation where a hacker have access to my SSH server with a user account that has only access to home directory and can read,write and execute commands. He does not have access to critical system folders and files, just the home.
How can he harm the windows server?
I don't know the windows implications, but local exploits (privilege escalation) are much more common than remote exploits which are fixed rather quickly. Once an attacker has more general access to the system (executing a range of commands, transferring files to the system) it's much harder to defend against him.
http://www.metasploit.com/framework/search has a lot of local exploits.
If the user really needs to have such kind of access, limit the commands he can execute to the absolute minimum, try to limit the write access to the filesystem and audit his/her activities.
The problem has also been addressed by Mandatory Access Control systems. Windows seems to have such a thing too.
Before giving to someone ssh access make sure that: