I was trying to setup ssh server on fresh Xubuntu install. Both server and clients are on the same LAN. The client was able to find and talk to the server on the LAN. However, after talking and exchanging keys, the client always end up failing with the following steps (using debug mode)
debug1: Authentications that can continue: publickey,password
debug3: start over, passed a different list publickey,password
debug3: preferred publickey,keyboard-interactive,password
debug3: authmethod_lookup publickey
debug3: remaining preferred: keyboard-interactive,password
debug3: authmethod_is_enabled publickey