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I've been using private-public key logins on my home server for several years but I've always left PasswordAuthentication yes so that if anything untoward happened I could still login.
Of course the likelihood of anything untoward happening is hugely increased by leaving password auth enabled.

So if I set PasswordAuthentication no I obviously won't be able to login to SSH using a username/password.
But can I still login to the machine locally using a system username/password?

I'm assuming yes, since logging in locally to the physical machine would have nothing to do with SSH. But before I go ahead and disable password auth I wanted to make 100% sure.

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Yes you will be able to locally login using an username/password since this is the configuration for the sshserver only and doesn't affect the local login procedure.

  • Wow 2 answers in the same minute, not sure which was first. Settled by a tie break, there are more words in this answer. Upvoted both. – batfastad Sep 13 '12 at 12:31
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    You can login locally even if you don't have ssh daemon. – Khaled Sep 13 '12 at 12:31
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You are correct in your assumption.

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