The file is /etc/ssh/ssh_config on the client and /etc/ssh/sshd_config on the server. If your using public key authentication you should disable any other mode of authentication. Here's another article for you on how to set that up:
http://www.g-loaded.eu/2005/11/10/ssh-with-keys/
It goes into a little more detail re the config files and how to add some extra security. It's a little intimedating at first, but once you fool around with it a bit, you will get the hang of it.
For your particular issue, from the above article, you probably don't have this uncommented in sshd_config on the server:
HostKey /etc/ssh/ssh_host_dsa_key