Hi DisasteR, thanks for attaching the logs.

ssh_pwauth gets handled by the set_passwords config module, which runs
as part of the cloud-config stage.

The problem is that cloud-config and cloud-final stages didn't run
because cloud-init is instructed to be disabled.

Some stanza in your user-data, vendor-data, instance-data or system-cfg
instructs the config module write_files, which runs before cloud-config,
to disable cloud-init.

One can see this in the log files and in:

# /run/cloud-init/combined-cloud-config.json
...
 "write_files": [
  {
   "owner": "root:root",
   "path": "/etc/cloud/cloud-init.disabled",
   "permissions": "0644"
  }

One solution, if the disablement is still desired, is to use the defer
subkey[1] of write-files to instruct cloud-init to touch the file as
part of the cloud-final stage, not disturbing the other stages during
the first boot.

[1] https://docs.cloud-init.io/en/latest/reference/modules.html#write-
files

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https://bugs.launchpad.net/bugs/2049860

Title:
  cloud-init cloud-config for ssh broken in jammy

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