Be on the box.

In 1 window, execute sshd using the -D option so it goes into non-deamon mode, and start adding adding -d (again and again) to increase the debug level, also using the -f to point to your test config file.

In another window (on the same box), use ssh with the -v option (again and again for more stuff), and go against localhost.

This will give a LOT of information about what it is trying to do. If it simply works, you have an off-box network block that you need to resolve.

Then, go to another box, and run the client side with the -v (etc)

The "connection reset by peer" sounds like a firewall in the middle killing the connection.