Okej, sorry, I guess I didn't read the logs as carefully as I should
have.
Anyhow, I'm rather sure your encrypted home directory is the reason why
you can't use public key ssh auth. Considering that encryptfs decrypts
your home directory, using your login password, at login time. Hence,
when you'r trying to auth using your ssh key there really isn't any
~/.ssh/authorized_keys available for sshd to check against.
That said, I'm sure we can agree that it isn't a bug in openssh?
Marking this bug report as invalid.
** Changed in: openssh (Ubuntu)
Status: Incomplete => Invalid
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Public key ssh auth doesn't work in Jaunty
https://bugs.launchpad.net/bugs/362427
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