I did some additional tests and reinstalling openssh-server does not break it. It only breaks after the update procedure.
To recreate the error, take a fresh OpenVZ 6 Templates of Ubuntu 16.04 64bit, and simply do: apt-get clean && apt-get autoclean && apt-get autoremove && apt-get update && apt-get upgrade && apt-get dist-upgrade && reboot Maybe there is some other package than openssh-server that breaks things down. Here is some of the output of update procedure: Setting up systemd (229-4ubuntu21.15) ... addgroup: The group `systemd-journal' already exists as a system group. Exiting. [/usr/lib/tmpfiles.d/var.conf:14] Duplicate line for path "/var/log", ignoring. Failed to openat(/dev/simfs): Operation not permitted Failed to validate path /var/run/screen: Too many levels of symbolic links Failed to validate path /var/run/sshd: Too many levels of symbolic links Failed to validate path /var/run/sudo: Too many levels of symbolic links Failed to validate path /var/run/sudo/ts: Too many levels of symbolic links ... Unpacking openssh-server (1:7.2p2-4ubuntu2.6) over (1:7.2p2-4ubuntu2.1) ... Preparing to unpack .../openssh-client_1%3a7.2p2-4ubuntu2.6_amd64.deb ... ... Setting up openssh-server (1:7.2p2-4ubuntu2.6) ... locale: Cannot set LC_CTYPE to default locale: No such file or directory locale: Cannot set LC_MESSAGES to default locale: No such file or directory locale: Cannot set LC_ALL to default locale: No such file or directory Failed to validate path /var/run/sshd: Too many levels of symbolic links -- You received this bug notification because you are a member of Ubuntu Touch seeded packages, which is subscribed to openssh in Ubuntu. https://bugs.launchpad.net/bugs/1814124 Title: sshd does not start after update Status in openssh package in Ubuntu: Incomplete Bug description: After processing system update by: apt-get clean && apt-get autoclean && apt-get autoremove && apt-get update && apt-get upgrade && apt-get dist-upgrade && reboot ssh server stops starting at system boot. It starts after doing: mkdir /var/run/sshd chmod 0755 /var/run/sshd service ssh start It happens on fresh Ubuntu-16.04 installs on every VPS provide I have tested so far. ProblemType: Bug DistroRelease: Ubuntu 16.04 Package: openssh-server 1:7.2p2-4ubuntu2.6 Uname: Linux 2.6.32-042stab127.2 x86_64 ApportVersion: 2.20.1-0ubuntu2.18 Architecture: amd64 Date: Thu Jan 31 10:18:56 2019 ProcEnviron: TERM=xterm PATH=(custom, no user) SSHDConfig: Error: command ['/usr/sbin/sshd', '-T'] failed with exit code 255: Missing privilege separation directory: /var/run/sshd SourcePackage: openssh UpgradeStatus: No upgrade log present (probably fresh install) To manage notifications about this bug go to: https://bugs.launchpad.net/ubuntu/+source/openssh/+bug/1814124/+subscriptions -- Mailing list: https://launchpad.net/~touch-packages Post to : touch-packages@lists.launchpad.net Unsubscribe : https://launchpad.net/~touch-packages More help : https://help.launchpad.net/ListHelp