You need to create a user account on the LInux system you are trying to connect to. The sshd_config file has nothing to do with user accounts. You need to create user accounts via the GNOME desktop, or through the command line as root. I forget the complete command, but it's something like:
useradd -m johndoe <- this creates a user named johndoe and the '-m' creates his home directory
passwd johndoe <- this sets up johndoe's password
Now you can log into the Linux box as johndoe and then login as root if you need to modify something.
Usually one should disable SSH'ing in as root as that is not safe. You can play around with the sshd_config option and have more security and control with it.
Last edited by Micro420; 07-15-2006 at 02:17 AM.