Unable to ssh using identity keys

Hi all, i am trying to ssh into a remote server without password, i tried the command with the verbose command 'ssh -v -l user1 10.10.10.10'

OpenSSH_3.6.1p2, SSH protocols 1.5/2.0, OpenSSL 0x0090701f
debug1: Reading configuration data /etc/ssh/ssh_config
debug1: Applying options for *
debug1: Rhosts Authentication disabled, originating port will not be trusted.
debug1: Connecting to 10.10.10.10 [10.10.10.10] port 22.
debug1: Connection established.
debug1: identity file /home/user1/.ssh/identity type 0
debug1: identity file /home/user1/.ssh/id_rsa type 1
debug1: Remote protocol version 1.99, remote software version OpenSSH_3.9p1
debug1: match: OpenSSH_3.9p1 pat OpenSSH*
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_3.6.1p2
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 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 '10.10.10.10' is known and matches the RSA host key.
debug1: Found key in /home/user1/.ssh/known_hosts:33
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,gssapi-with-mic,password
debug1: Next authentication method: publickey
debug1: Offering public key: /home/user1/.ssh/id_rsa
debug1: Authentications that can continue: publickey,gssapi-with-mic,password
debug1: Next authentication method: password

i have already copied the public key(id_dsa.pub) to both authorized_keys and authorized_keys2.what could be the problem?

On the remote server, i am seeing this error

Authentication refused: bad ownership or modes for directory /home/user1

Update:
Hi all, problem resolved. The home directory permission was set incorrectly.