Verify the OMVS UID for the user and sshd_config file settings. IBM made a change to the default SSH config files for z/OS 2.4. The summary of changes for OpenSSH z/OS Version 2 Release 4 (V2R4) states:
Root login using a password is no longer enabled by default.
The parameter this effects is PermitRootLogin. If PermitRootLogin is set to NO in sshd_config, then UID 0 users won't be able to login by using a password. The options are to either use a non-UID 0 user or change the config file to specify YES for this parameter and recycle the OpenSSH address space.