It looks like you're logging in without a password via a copy of your id_dsa.pub key in the server's authorized_keys2 file, yea? The user is trying to login with a username/password and so is triggering a different authentication path.
Instead of going to the trouble of debugging that, I would:
(1) reinstall openssh-server
(2) regenerate public keys unless you have some good motivation not to do so (they are signed by some company who charges you cash is one such reason I suppose.)
In /etc/ssh/sshd_config, Set the LogLevel to something higher so you can gather more information about what's going on. From sshd_config(5):
Gives the verbosity level that is used when logging messages from sshd(8). The possible values are: SILENT, QUIET, FATAL, ERROR, INFO, VERBOSE, DEBUG, DEBUG1,
DEBUG2, and DEBUG3. The default is INFO. DEBUG and DEBUG1 are equivalent. DEBUG2 and DEBUG3 each specify higher levels of debugging output. Logging with a DEBUG
level violates the privacy of users and is not recommended.