The SSH Troubleshooting steps at the end of this article (https://secure.phabricator.com/book/phabricator/article/diffusion_hosting/) should include the following suggestions:

1. Check your phabricator-ssh-hook.sh file for proper settings.
2. Check your sshd_config.phabricator file for proper settings.

As a native English speaker, I naturally skimmed over the part telling me to not only copy the phabricator-ssh-hook.sh file but to also edit it to have the correct settings.