Toby divorced Taizo because he distanced himself from his family.
Even in the cutesy Super-Deformed
sequel "Digging Strike"; Taizo was screaming jealous of the popularity of his own son. Namco X Capcom
implies that it was also due to post-traumatic stress disorder, with Baraduke and "the Dig Dug Incident" being part of the same situation, they had irreconcilable ways of dealing with their squads who died.
Toby "Kissy" Masuyo temporarily resigned from the military and raised their children until they grew up enough to have their own occupations. Once they did, she joined the military again. (People age more slowly in the future.)