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I am running Ubuntu 16.04 0 as a headless server.
I have setup key authentication to access the server through Putty. I used Putty keygen to generate a 4096 bit key, popped that onto the server and am able to authenticate successfully UNTIL I disable password access in sshd_config then I get the "Server refused our key" message from Putty when trying to authenticate.
Just changed the following in sshd_config (this is a fresh Ubuntu install):

PermitRootLogin no
PasswordAuthentication no
UsePAM no 
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    You should check the server logs: /var/log/auth.log. I would hazard a guess that it's either a perms issue on the ssh directory on the server or the ownership perms on your private key client side. Dec 14, 2016 at 19:51

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I rechecked the Ubuntu permissions and they appeared to be correct. However I decided to reapply them and chmod'd the same level permissions to the /.ssh directory at 0700 and 0644 to the authorized keys file and that seems to work. Baffling as these were the existing permission levels anyway.....

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