passwordAuthentication no isn’t the problem
I currently use that setting on my local server without issues
I think with
AllowGroups sshusers
PermitRootLogin no
Port XXXXX
PasswordAuthentication no
When I add this line I have the same issue
By default we limit access to ssh as nologin and supply an RSSH (featured upgraded to RUSH) support and have a Chroot jail.
Please try to remove it and check if it is working.
Maybe AllowGroups sshusers sftpusers will also work how ever not tested