indeed it was an sshd config issue: external_sshd_config
also i would like to mention that, since i have 'PAM' enabled i had to
do the following as well to get it to work, and failed otherwise.
ln -s sshd ext_sshd
i was scratching my head until i found the above solution at
> This sounds like an sshd config issue. I'd work with the external_sshd_config
> to find what is keeping you from being able to log in. Andy could confirm,
> but I'm pretty sure vcld sets that file up to allow password based logins.
> I'd compare external_sshd_config from the box that won't let you log in with
> sshd_config from a non-VCL machine that will let you use a password to log in.
> If you try sshing to it from another linux machine, you can use 'ssh -vvv' to
> get quite a bit of debugging info about the connection establishment.