I recently set up a new CentOS 5 server, which has OpenSSH installed by default.
When I connect with PuTTY, the SSH server tells me "access denied" before prompting me for a password. Once I provide the password I log in to my shell fine. It never used to work seemingly out of order like that before, and there's nothing strange in the security log when I log in, just a successful login.
login as: admin Access denied admin@gold's password: Last login: Sun Jul 17 00:26:50 2011 from pool-xxx-xx-xxx-xx.phlapa.fios.verizon.net
I made one change in the default config to change
PermitRootLogin to no.
I also upgraded PuTTY to the latest version on the same day as setting up the server, though that's probably unrelated.