sshd, how is this possible, security bug?

[Didier Wiroth]

Hi,

using freebsd 5.2 release.

Below you can see what is not commented out in my sshd_config file, which is almost the default:
#$FreeBSD: src/crypto/openssh/sshd_config,v 1.33 2003/09/24 19:20:23 des Exp $
#VersionAddendum FreeBSD-20030924
Protocol 2
ListenAddress x.y.z.x
LoginGraceTime 60
PubkeyAuthentication yes
PasswordAuthentication no
PermitEmptyPasswords no
PrintMotd yes
PrintLastLog yes
AllowGroups ssh
Banner /usr/local/etc/ssh/banner
Subsystem       sftp    /usr/libexec/sftp-server

I'm using ssh windows client version 3.2.9 from:
http://www.ssh.com
I get a passphrase prompt, I enter xyz, press enter, than I'm prompted to enter my "password", I enter the password and I have my prompt:
me at mypc:

Is this a security bug, a misconfiguration or what?

I thought I had disabled password authentication with: PasswordAuthentication no

thx a lot