Hi,
thank you for reporting the bug and your help to make Ubuntu better.

It is not actually an ssh issue, but only triggered while upgrading ssh when it 
tries to insert its init script.
In the log I found:
insserv: There is a loop between service tomcat and dns-clean if started
insserv: There is a loop between service tomcat and mountkernfs if started
insserv: There is a loop between service plymouth and urandom if started
insserv: There is a loop between service tomcat and udev if started

I've seen that more in a tomcat context so I'll reassign there - this seems to 
be the "common denominator":
insserv: Starting tomcat depends on plymouth and therefore on system facility 
`$all' which can not be true!

That eventually stops your ssh update/install at:
  update-rc.d: error: insserv rejected the script header
  dpkg: error processing package openssh-server (--configure)

At least some of theses issues I've seen where related to custom extra
software being installed confusing the dependencies - do you happen do
know if you have any of the listed sevrices tweaked or installed from a
non archive source?

I installed openssh-server, tomcat7, plymouth and they worked (tomcat by 
default needs a config, but I didn't hit your issue).
I couldn't find dns-clean what package is that from?

Since it seems likely to me that this is a local configuration problem,
rather than a bug in Ubuntu, I'm marking this bug as Incomplete.

If indeed this is a local configuration problem, you can find pointers
to get help for this sort of problem here:
http://www.ubuntu.com/support/community

Or if you believe that this is really a bug, then you may find it
helpful to read "How to report bugs effectively"
http://www.chiark.greenend.org.uk/~sgtatham/bugs.html. We'd be grateful
if you would then provide a more complete description of the problem,
explain why you believe this is a bug in Ubuntu rather than a problem
specific to your system, and then change the bug status back to New.

** Changed in: openssh (Ubuntu)
       Status: New => Incomplete

-- 
You received this bug notification because you are a member of Ubuntu
Touch seeded packages, which is subscribed to openssh in Ubuntu.
https://bugs.launchpad.net/bugs/1646731

Title:
  package openssh-server 1:7.2p2-4ubuntu2.1 failed to install/upgrade:
  subprocess installed post-installation script returned error exit
  status 1

Status in openssh package in Ubuntu:
  Incomplete

Bug description:
  can't install open ssh server complete

  ProblemType: Package
  DistroRelease: Ubuntu 16.04
  Package: openssh-server 1:7.2p2-4ubuntu2.1
  ProcVersionSignature: Ubuntu 4.4.0-51.72-generic 4.4.30
  Uname: Linux 4.4.0-51-generic x86_64
  ApportVersion: 2.20.1-0ubuntu2.1
  Architecture: amd64
  Date: Fri Dec  2 10:41:57 2016
  ErrorMessage: subprocess installed post-installation script returned error 
exit status 1
  InstallationDate: Installed on 2016-11-21 (11 days ago)
  InstallationMedia: Ubuntu 16.04.1 LTS "Xenial Xerus" - Release amd64 
(20160719)
  RelatedPackageVersions:
   dpkg 1.18.4ubuntu1.1
   apt  1.2.15
  SourcePackage: openssh
  Title: package openssh-server 1:7.2p2-4ubuntu2.1 failed to install/upgrade: 
subprocess installed post-installation script returned error exit status 1
  UpgradeStatus: No upgrade log present (probably fresh install)

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