Strange.
I just made the same modification to /etc/ssh/sshd_config on my Intrepid
test server. No matter if PasswordAuthentication is set to on or off I
still get my motd. This both using password logins (when possible) as
well as pubkey login.
Anything non-default about your system? Other modifications to
sshd_config? Alternative passdb backend? Different PAM settings?
** Changed in: openssh (Ubuntu)
Status: New => Incomplete
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motd disappears when using PasswordAuthentication in OpenSSH server
https://bugs.launchpad.net/bugs/348627
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