According to the vendor of the networking component, it looks like the SSH handshake is being performed, but either the server doesn't like one of the options or it's not supporting a required feature. The first thing they suggest is making sure that the SSH server is configured to support password authentication. They have a knowledge base article at
http://www.catalyst.com/kb/100352 which discusses this particular issue. Although it's written to address an issue with the default SuSE configuration, it could apply to other systems as well.