SSH Daemon – Fixing Public Key Authentication Failures

I have no clue on how this happens. The distro is Scientific Linux 6.1 and everything is set up to perform authentication via public key. Yet, when sshd is running as a daemon (service sshd start), it doesn't accept public keys. (To obtain this piece of log, I've changed the sshd script to add the -ddd option)

debug1: trying public key file /root/.ssh/authorized_keys
debug1: restore_uid: 0/0
debug1: temporarily_use_uid: 0/0 (e=0/0)
debug1: trying public key file /root/.ssh/authorized_keys2
debug1: restore_uid: 0/0
Failed publickey for root from xxx.xxx.xxx.xxx port xxxxx ssh2
debug3: mm_answer_keyallowed: key 0x7f266e1a8840 is not allowed
debug3: mm_request_send entering: type 22
debug3: mm_request_receive entering
debug2: userauth_pubkey: authenticated 0 pkalg ssh-rsa
debug3: Wrote 64 bytes for a total of 1853
debug1: userauth-request for user root service ssh-connection method publickey
debug1: attempt 2 failures 1

If sshd is run in debug mode /usr/sbin/sshd -ddd, authentication works like a charm:

debug1: trying public key file /root/.ssh/authorized_keys
debug1: fd 4 clearing O_NONBLOCK
debug1: matching key found: file /root/.ssh/authorized_keys, line 1
Found matching RSA key: d7:3a:08:39:f7:28:dc:ea:f3:71:7c:23:92:02:02:d8
debug1: restore_uid: 0/0
debug3: mm_answer_keyallowed: key 0x7f85527ef230 is allowed
debug3: mm_request_send entering: type 22
debug3: mm_request_receive entering
debug3: Wrote 320 bytes for a total of 2109
debug2: userauth_pubkey: authenticated 0 pkalg ssh-rsa
Postponed publickey for root from xxx.xxx.xxx.xxx port xxxxx ssh2
debug1: userauth-request for user root service ssh-connection method publickey
debug1: attempt 2 failures 0

Any ideas?? Has anyone seen anything like this?

Notes:

File permissions have been double checked:

# ll -d .ssh
drwx------. 2 root root 4096 Oct 14 10:05 .ssh
# ll .ssh
total 16
-rw-------. 1 root root  786 Oct 14 09:35 authorized_keys
-rw-------. 1 root root 1675 Oct 13 08:24 id_rsa
-rw-r--r--. 1 root root  393 Oct 13 08:24 id_rsa.pub
-rw-r--r--. 1 root root  448 Oct 13 12:51 known_hosts

I was asked if sshd can access root's files in "daemon mode". The closest answer I get to this question is:

# netstat -ntap | grep 22
tcp        0      0 0.0.0.0:22                  0.0.0.0:*                   LISTEN      19847/sshd 
# ps -ef | grep 19847
root     19847     1  0 09:58 ?        00:00:00 /usr/sbin/sshd

If sshd is running as root, I don't know how it's not possible to access its own files. Could SELinux be the cause?