Throughly tested -proposed:
1. Launched with username ubuntu, SSH Auth only
2. Launched with username utlemming, SSH Auth only
3. Launched with username ubuntu, password auth only
4. Launched with username utlemming, password auth only
5. Launched with username utlemming,  SSH Auth with password set
6. Launched with username ubuntu, SSH Auth with password set

Confirmed that sudo works as expected. Marking as confirmed.

** Tags removed: verification-needed
** Tags added: verification-done

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https://bugs.launchpad.net/bugs/1224684

Title:
  [SRU] cannot sudo, prompted for password on 12.04 Windows Azure

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