sshd failure on Linux

I'm using SuSE 8.1 as server.

All was working properly this noon.
Sometime this afternoon attempted logins from
remote or loop back from console cause hang.

I found nothing helpful in the logs but I did run
sshd with -d -d -d startup.

I got the following log

1752: debug1: sshd version OpenSSH_3.4p1
1752: debug3: Not a RSA1 key file /etc/ssh/ssh_host_rsa_key.
1752: debug1: read PEM private key done: type RSA
1752: debug1: private host key: #0 type 1 RSA
1752: debug3: Not a RSA1 key file /etc/ssh/ssh_host_dsa_key.
1752: debug1: read PEM private key done: type DSA
1752: debug1: private host key: #1 type 2 DSA
1752: Disabling protocol version 1. Could not load host key
1752: debug1: Bind to port 22 on ::.
1752: Server listening on :: port 22.
1752: debug1: Server will not fork when running in debugging mode.
1752: Connection from ::ffff: port 2484
1752: debug1: Client protocol version 2.0; client software version
1752: debug1: match: OpenSSH_3.4p1 pat OpenSSH*
1752: Enabling compatibility mode for protocol 2.0
1752: debug1: Local version string SSH-2.0-OpenSSH_3.4p1
1752: debug2: Network child is on pid 1753
1752: debug3: preauth child monitor started
1752: debug3: mm_request_receive entering
1753: debug3: privsep user:group 71:65
1753: debug1: list_hostkey_types: ssh-rsa,ssh-dss
1753: debug3: mm_request_send entering: type 20
1752: debug3: monitor_read: checking request 20
1753: debug3: mm_ssh_gssapi_server_ctx: waiting for
1753: debug3: mm_request_receive_expect entering: type 21
1753: debug3: mm_request_receive entering

I assume it must be a corrupt file someplace, but having no luck

I can ssh from the server to another server and
I can telnet to the server in questions.

Any suggestions appreciated.