I tried pretty much everything I could to make this work. I spent literally 6 hours on research and nothing helps to remove "Server refused our key" error.
My username I tried to make is "Testuser" but I logged in SSH as root, should I also
chown Testuser:Testuser authorized_keys?
I originally tried this and everything alike: http://www.howtoforge.com/ssh_key_based_logins_putty_p3 Then I followed this and still does not work : http://www.walkernews.net/2009/03/22/how-to-fix-server-refused-our-key-error-that-caused-by-putty-generated-rsa-public-key/