One other quick item, in the /etc/ssh/sshd_config file check to see of the following line is comment out or not:
AuthorizedKeyFile %h/.ssh/authorized_keys (default is commented out)
If it isn't commented out and you still can't access simple ssh then comment it out and restart ssh. Once you have simple known_host resolution and want to reestablish keys than remove the # write and save the sshd_config and restart ssh
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James