I have checked in some libc changes with this log entry:
1999-09-17 Roland McGrath <roland@baalperazim.frob.com>
* hurd/port2fd.c (_hurd_port2fd): Never change CTTYID port.
* sysdeps/mach/hurd/setsid.c (__setsid): Fix return type -> pid_t.
Return _hurd_pgrp instead of 0.
Please let me know if that fixes the setsid problem for you or not.
I have not had a chance to test it yet.