I had a problem turning physics off on an object that sounds a bit similar. I tried lots of complicated stuff like re-setting the position and orientation every frame, and applying particular forces, and none of it worked.
The only solution I’ve found is to End the object and, at the same time, replace it (with the add object actuator) with another object that looks identical but has no physics properties. The change is invisible, so it works fairly well.
I only needed to do the transition one-way, but I don’t see why you couldn’t make the dummy object spawn a physics object back in when you wanted to make it move again.
Hope that helps!