I have only limited experience with SmartOS, but the quick fix is to login to the global zone and use zlogin to enter the VM (get the VM hash from vmadmin list). You'll then have a shell and can change the password, add users, and adjust the sshd config to your liking.
Not sure that will work on a VM (vs zone), but I'll give it a shot when I get back to the machine.
--lyndon
