You've got:
modcall[authorize]: module "eap" returns noop for request 0
users: Matched entry DEFAULT at line 153
modcall[authorize]: module "files" returns ok for request 0
...and
modcall[authorize]: module "sql" returns ok for request 0
And finally
rad_check_password: Found Auth-Type System
auth: type "System"
Processing the authenticate section of radiusd.conf
modcall: entering group authenticate for request 0
modcall[authenticate]: module "unix" returns notfound for request 0
modcall: leaving group authenticate (returns notfound) for request 0
auth: Failed to validate the user.
Something is setting Auth-Type to "System". It's either the users file
on line 153, or your SQL. Fix it.
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