Tried by copying the contents of the id_rsa.pub from a Windows machine into the ssh terminal there, to the authorized_keys file. Did not succeed. Permission denied (publickey)
Thought it might be some permissions problem, tried changing
chmod 755 .ssh - still no go. So changed it back to 700.
Some posts suggest using DSA instead of RSA on OS X. "Don't use RSA"! So, tried with DSA as given here, using ssh-keygen -d instead of ssh-keygen -t rsa and also not copy-pasting the key from Windows or Mac but instead doing a cat id_dsa.pub >> .ssh/authorized_keys2 - this time it worked immediately.