Comment 28 for bug 1690485

See also Ticket #1831765 and #1832110 regarding the path of the privilege separation directory (aka: /run/sshd).

This path is hard-coded into sshd and there is no means of changing its location. I have found that if the directory is missing, all ssh communication unceremoniously stops (iff UsePrivilegeSeparation yes). The original OpenSSH 7.6p1 assigns the privilege separation directory to "/var/empty" (see man sshd at openssh.com). When Ubuntu changed to systemd from Upstart, the privilege separation directory was changed from "/var/empty" to "/run/sshd". This is also supported by reviewing the value of /lib/systemd/system/ssh.service and look at the RuntimeDirectory=sshd.

My work-around is to create a service that does nothing other than create the "/run/sshd" directory and define the RuntimeDirectory=(anything but sshd) in your .service file.