Why is authorized_keys ignored?

Question

I have a fresh install of CentOS 6.5, which I'm using as a dev server for a small team. We are having a central bare Git repository which we'll be connecting to via ssh.

I have setup a user called git and a user called test. test's public key has been appended to git's authorized_keys file. As far as I can tell the permissions are all correct:

[test@hackdashit ~]$ ls -aZ ~/.ssh/
drwx------. test developers unconfined_u:object_r:ssh_home_t:s0 .
drwx-----x. test developers unconfined_u:object_r:user_home_dir_t:s0 ..
-rw-------. test developers unconfined_u:object_r:ssh_home_t:s0 authorized_keys
-rw-------. test developers unconfined_u:object_r:ssh_home_t:s0 config
-rw-------. test developers unconfined_u:object_r:ssh_home_t:s0 id_rsa
-rw-------. test developers unconfined_u:object_r:ssh_home_t:s0 id_rsa.pub

And the ssh directory itself:

[test@hackdashit ~]$ ls -aZ ~
drwx------. test developers unconfined_u:object_r:ssh_home_t:s0 .ssh

When connecting from a remote machine, using the private key, it connects without the password fine. However when I try to connect locally, I see this:

[test@hackdashit ~]$ ssh -v hackdashit
OpenSSH_5.3p1, OpenSSL 1.0.1e-fips 11 Feb 2013
debug1: Reading configuration data /home/test/.ssh/config
debug1: Applying options for hackdashit
debug1: Reading configuration data /etc/ssh/ssh_config
debug1: Applying options for *
debug1: Connecting to localhost [::1] port 22.
debug1: Connection established.
debug1: identity file /home/test/.ssh/id_rsa type 1
debug1: identity file /home/test/.ssh/id_rsa-cert type -1
debug1: Remote protocol version 2.0, remote software version OpenSSH_5.3
debug1: match: OpenSSH_5.3 pat OpenSSH*
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_5.3
debug1: SSH2_MSG_KEXINIT sent
debug1: SSH2_MSG_KEXINIT received
debug1: kex: server->client aes128-ctr hmac-md5 none
debug1: kex: client->server aes128-ctr hmac-md5 none
debug1: SSH2_MSG_KEX_DH_GEX_REQUEST(1024<1024<8192) sent
debug1: expecting SSH2_MSG_KEX_DH_GEX_GROUP
debug1: SSH2_MSG_KEX_DH_GEX_INIT sent
debug1: expecting SSH2_MSG_KEX_DH_GEX_REPLY
The authenticity of host 'localhost (::1)' can't be established.
RSA key fingerprint is 00:00:00:00:00:00:00:00:00:00:00:00:00:00:00:00.
Are you sure you want to continue connecting (yes/no)?

Note: I changed the RSA key fingerprint above

These are the contents of my ~/.ssh/config file:

Host hackdashit
  Hostname localhost
  User git
  IdentityFile ~/.ssh/id_rsa

The same thing happens when I try to run Git:

[test@hackdashit ~]$ git clone ssh://hackdashit/repos/test.git
Initialized empty Git repository in /home/test/test/.git/
The authenticity of host 'localhost (::1)' can't be established.
RSA key fingerprint is c3:9f:65:f0:04:39:93:82:7e:1d:57:9b:16:2f:76:59.
Are you sure you want to continue connecting (yes/no)?

Can anyone tell me where I'm going wrong here, to get ssh connecting without passwords from the test account to the git account so I can use Git either locally or remotely via ssh?

Note: I've also read this and this question on the matter, but I don't think they pertain to me as permissions (including SELinux) appear correct.

Update

I stopped sshd then ran sudo /usr/sbin/sshd -d and tried to connect with ssh test@localhost with the ~/.ssh/config file removed, and got the following output:

debug1: Server will not fork when running in debugging mode.
debug1: rexec start in 5 out 5 newsock 5 pipe -1 sock 8
debug1: inetd sockets after dupping: 3, 3
Connection from ::1 port 39980
debug1: Client protocol version 2.0; client software version OpenSSH_5.3
debug1: match: OpenSSH_5.3 pat OpenSSH*
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_5.3
debug1: permanently_set_uid: 74/74
debug1: list_hostkey_types: ssh-rsa,ssh-dss
debug1: SSH2_MSG_KEXINIT sent
debug1: SSH2_MSG_KEXINIT received
debug1: kex: client->server aes128-ctr hmac-md5 none
debug1: kex: server->client aes128-ctr hmac-md5 none
debug1: SSH2_MSG_KEX_DH_GEX_REQUEST received
debug1: SSH2_MSG_KEX_DH_GEX_GROUP sent
debug1: expecting SSH2_MSG_KEX_DH_GEX_INIT
debug1: SSH2_MSG_KEX_DH_GEX_REPLY sent
debug1: SSH2_MSG_NEWKEYS sent
debug1: expecting SSH2_MSG_NEWKEYS

Answer 1

For more information, you can try:

ssh -Tvvv hackdashit

Also:

sudo sshd stop
sudo ssh -Dd

That way, you will see from the ssh daemon (sshd) point of view what it receives and what it misses to complete the query (as in this answer).

you can also check if you go further with:

 ssh -o StrictHostKeyChecking=no hackdashit

Note that the url to use for git would be:

git clone hackdashit:/repos/test.git

---

The OP LeonardChallis confirms in the comments:

The StrictHostKeyChecking=no sent my down the right route.
I ran

ssh-keyscan -t rsa localhost > /etc/ssh/ssh_known_hosts 

and it magically works :)