seteuid access denied - openSSH installation

Hi,

I have installed openssh in one of my windows servers following SUA community guidelines. I can successfully install and generate RSA DSA keys. But I cannot SSH to server from my Solaris machine. Below is the output from ssh -v <server>. Also I tried to SSH from the K-shell to localhost itself where it shows SETEUID: Access denied.

From K-shell of Windows Machine
$ssh localhost
PRIV_END: seteuid: Permission Denied

From Solaris Machine
$ssh -v <servername>
OpenSSH_3.8.1p1, OpenSSL 0.9.7d 17 Mar 2004
debug1: Reading configuration data /usr/local/etc/ssh_config
debug1: Connecting to <server> [ip address] port 22.
debug1: Connection established.
debug1: identity file /home/user/.ssh/identity type 0
debug1: identity file /home/user/.ssh/id_rsa type 1
debug1: identity file /home/user/.ssh/id_dsa type -1
debug1: Remote protocol version 2.0, remote software version OpenSSH_5.4
debug1: match: OpenSSH_5.4 pat OpenSSH*
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_3.8.1p1
debug1: SSH2_MSG_KEXINIT sent
debug1: SSH2_MSG_KEXINIT received
debug1: kex: server->client aes128-cbc hmac-md5 none
debug1: kex: client->server aes128-cbc hmac-md5 none
debug1: SSH2_MSG_KEX_DH_GEX_REQUEST(1024<1024<8192) sent
debug1: expecting SSH2_MSG_KEX_DH_GEX_GROUP
debug1: SSH2_MSG_KEX_DH_GEX_INIT sent
debug1: expecting SSH2_MSG_KEX_DH_GEX_REPLY
debug1: Host '<server>' is known and matches the RSA host key.
debug1: Found key in /home/user/.ssh/known_hosts:283
debug1: ssh_rsa_verify: signature correct
debug1: SSH2_MSG_NEWKEYS sent
debug1: expecting SSH2_MSG_NEWKEYS
debug1: SSH2_MSG_NEWKEYS received
debug1: SSH2_MSG_SERVICE_REQUEST sent
debug1: SSH2_MSG_SERVICE_ACCEPT received
debug1: Authentications that can continue: publickey,password,keyboard-interactive
debug1: Next authentication method: publickey
debug1: Offering public key: /home/user/.ssh/id_rsa
debug1: Authentications that can continue: publickey,password,keyboard-interactive
debug1: Trying private key: /home/user/.ssh/id_dsa
debug1: Next authentication method: keyboard-interactive
debug1: Authentications that can continue: publickey,password,keyboard-interactive
debug1: Next authentication method: password
password:
Connection closed by ipaddress
$

Please help....