I was able to setup ssh login using public keys for root users and tried to apply the same logic for non-root users. I have tried to troubleshoot this issue in vain. I am using centos for both my local machine and remote server.
Here is a gist of my sshd_config file a my remote server,
RSAAuthentication yes PublicKeyAuthentication yes AuthorizedKeysFile /etc/ssh/user/authorized_keys PasswordAuthentication no UsePAM no PermitRootLogin without-password
I have moved my authorized keys file away from the user's home to /etc/ssh/user/authorized_keys as I read about home dir encryption in centos.
I have also changed the ownership of all files/dirs associated to the non-root user.
Not sure what step I am missing in my config as the same config works very well for root remote logins.