The default afsd options (for AIX machines at least) end up producing a /afs directory that is mode 777. This causes sshd to refuse to use public key files stored in .ssh directories somewhere under /afs. You need "StrictModes no" in sshd_config. My question is, where does the mode 777 come from? As far as I know, there is nothing special about the mode on /afs. You could probably have your admin chmod it.