I ran FreeBSD 5.2 for a long time with the default SSHd and then decided to upgrade to 5.3-STABLE. I normally use SecureCRT as my SSH client and I like password authentication. After I upgraded to 5.3, I could no longer logon using password authentication and I had to switch to keyboard interactive. This disallowed me from logging in with sftp from remote locations which really bummed me out. Here is the fix I found.