whenever trying to ssh into the server on the local network. ssh spits out the following text: The authenticity of host 'karma (192.168.0.2)' can't be established. RSA key fingerprint is e2:82:c0:df:29:55:70:1c:09:8c:86:f9:71:65:05:16. Are you sure you want to continue connecting (yes/no)? It would seem to me that the known_hosts file doesn't get read correctly when trying to verify the host key, even though it gets written to correctly. I've verified that this is not a permissions problem (my known_hosts file was mode 777 at one point in time). I'm not using PAM with openssh either. etcat versions openssh shows that I have 3.6.1_p2 on the server. etcat versions openssh shows that I have 3.7.1_p2 on the client.
this actually seems to be caused by an error or imcompatibility with openssl somewhere. I recently recompiled my whole system and don't have this error anymore. Perhaps openssh needs to be added to revdep-rebuild when openssl is upgraded to 0.9.7 from 0.9.6? /me starts grabbing at straws. :/
Note that in a security application such as ssh, permissions of 777 *are* a permissions problem. Maximum permissions are 755. Any group/other write bits *will* cause problems. Given that the file is *not* executable, there is no reason to give them execute permissions, so they should be either 644 or 444. After fixing the permissions, try running ssh with -v -v -v and see if there's anything useful in the text.
I am unable to reproduce this anymore.