Same here. Ubuntu 13.10 guest on ubuntu 14.04 host worked properly
before.

After upgrading ubungu 13.10 guest (using do-release-upgrade) password-
based ssh login stopped working. The example has the same result here.

It is interesting that key-based ssh login works *and* causes the same
"pam_systemd(sshd:session): Failed to create session: No such file or
directory" message in /var/log/auth.log.

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https://bugs.launchpad.net/bugs/1318168

Title:
  su: Failed to create session: No such file or directory

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