If a client (openssh, putty) insists on nistp521 as openssh offers in the debug dialogue then the connection fails or falls back to nistp256.
If you create a nistp521 host key and add it to sshd_config then nistp521 is used successfully. Not sure if nistp256 could use a nistp521 key or if this is intended or not? I assume it tries to use the default 256bit ecdsa key that is too short for nistp521.