For the archives.

Found the problem the rights for the .ssh directory were wrong. They need to be "700". Given that I used adduser to create that account I think umask or something else for the root user may be wrong or perhaps the adduser script.

The other point worth mentioning for anyone having a simmilar problem (ie some IDs connect, but others don't) is a file /etc/login.access. Settings in that file may allow some users to connect, but not others.

Obviously by the same token /etc/login.conf could also be an issue, but a less common one (ie the user has some type of time restriction).