If this occurs to you, don't spend hours like me hacking /etc/ssh/sshd_config but check "All users" in System preferences > Sharing. Moreover, to apply the changes you must restart the server and you can do so quickly also in Sharing by checking out and in "Remote login". Indeed the behaviour is kind of buggy because you are still prompted for password and there is nothing to see in ssh -v.
The problem Sharing files from Mac to Mac (both on Mac OS X El Capitan) on the same local network, I cannot see a target user's Library (as opposed to his other directories). The solution For the target user, ~/Library is accessible, with the same permissions as other directories, but appears greyed out . Let the target user do: in Finder, View > Show View Options, check Show Library Folder. Remark No problem with nfs server on target Mac. Reference Mac OS X file sharing