I've read the previous bug reports on this site regarding this issue. I haven't been able to make any of the workarounds work. I was wondering if this is fixed in the latest issue of ssh. First off, how to I tell which version ssh/sshd I have? /usr/bin/ssh -v
sshd requires getpwnam() and friends to return sane values for usernames that it receives. If you don't want to setup /etc/passwd then you may need to investigate nss_radius or something similar.
Mass move of bugs RESOLVED->CLOSED following the release of openssh-5.5p1