Never ending SSHD story: offering public key terminates connection

[Ilya Dogolazky]

A small follow up about this: I found a registry string
Computer\HKEY_LOCAL_MACHINE\SYSTEM\ControlSet001\sshd\Parameters\AppArgs
and changed the sshd command line parameters from "-D" to "-d -d -d"

This was enough to receive the server log in /var/log/sshd.log (attached 
here). The interesting line in the file is in my opinion this one:

"seteuid 1001: Operation not permitted"

The number "1001" is the UID of the user ilya.

Thus something seems to be wrong with permissions in the system.
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