Really, this is a "Note To Self" post... but, it may help others.
I've had a longstanding issue connecting to remote servers via SSH/SFTP. It just cropped up again in Ubu Quantal -- undoubtedly triggered by an OpenSSH upgrade.
The "fix" is simple, and works every time (for me) but it always takes me by surprise, when an upgrade, fresh install (or whatever) overwrites my OpenSSH daemon config file. Then, I have to do a web search to refresh my memory. Soooo, let's give the search bots another post to chew on... LoL!
EDIT THE FOLLOWING
"Error: ssh program unexpectedly exited"
CHANGE "YES" TO "NO", ON THIS LINE, AND SAVE
sudo gedit /etc/ssh/sshd_config
# Package generated configuration file
# See the sshd_config(5) manpage for details
# What ports, IPs and protocols we listen for
# Use these options to restrict which interfaces/protocols sshd will bind to
# HostKeys for protocol version 2
#Privilege Separation is turned on for security
# Lifetime and size of ephemeral version 1 server key
# Don't read the user's ~/.rhosts and ~/.shosts files
# For this to work you will also need host keys in /etc/ssh_known_hosts
# similar for protocol version 2
# Uncomment if you don't trust ~/.ssh/known_hosts for RhostsRSAAuthentication
# To enable empty passwords, change to yes (NOT RECOMMENDED)
# Change to yes to enable challenge-response passwords (beware issues with
# some PAM modules and threads)
# Change to no to disable tunnelled clear text passwords
# Kerberos options
# GSSAPI options
# Allow client to pass locale environment variables
AcceptEnv LANG LC_*
Subsystem sftp /usr/lib/openssh/sftp-server
# Set this to 'yes' to enable PAM authentication, account processing,
# and session processing. If this is enabled, PAM authentication will
# be allowed through the ChallengeResponseAuthentication and
# PasswordAuthentication. Depending on your PAM configuration,
# PAM authentication via ChallengeResponseAuthentication may bypass
# the setting of "PermitRootLogin without-password".
# If you just want the PAM account and session checks to run without
# PAM authentication, then enable this but set PasswordAuthentication
# and ChallengeResponseAuthentication to 'no'.
Thanks, for your indulgence. Hope it helps others...