Amazon LightSail instance connection ssh error

I have a Amazon LightSail instace running amazon-ec2 linux. Today I'm running into an issue on ssh connection. Even with port 22 open I really can't connect over putty or using web-based ssh client:

On putty it says Server refused our key and asks for password that I never had, I have used the ppk key and it worked before.

On web-based ssh client it says I have been disconnect (Você foi desconectado in portuguese):

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This issue starts after I set 'PasswordAuthentication yes' in /etc/ssh/sshd_config file

I tried to start another instance from old snapshots and the same error occurs. My instance is now inaccessible but it is running and my site is running but I cant use FTP or ssh to connect.