I wonder if I give the impression that I know a lot about this, but I started in linux just one year ago withou any previous background, so I still have a very long way to go before I consider myself an expert. However, I am glad to explain to you how I did it, in the hope this may be of help to you. The server at my company is Ubuntu 8.04 LTS. I simply followed the following tutorial:
Then I customised it with my own SQL query, database name, etc. I am no expert in SQL neither, but again I am very stubborn, so I googled until I learnt and understood the syntax for my query (in my case it's a bit more complicated than usual because I have too lookup across three tables on a database containing hotel reservations, and then autorise according to family name, reservation code as password, and the reservation being valid for the current date).
Please notice the comment on the tutorial: "This HOWTO presumes you have an x86 machine. This is not going to work on AMD64, because both Chillispot and FreeRadius have bugs which prevent them to work as they should. I don't know the status of these softwares on other platforms." Could this be affecting you?
I find this tutorial well explained, and I think that it may help you. In my case, I read it all a few times until I understood what I was doing before actually setting up the software.
Regarding the contents of the verbous debug messages your server gives you, in my case if the syntax of the SQL query is wrong then freeradius will tell me so and the startup of the daemon halts, so freeradius does not run at all. Assuming that freeradius behaves the same way in Ubuntu as in CentOS, your case looks like a different one to me, it seems to me as if the syntax of your SQL query is good but for some reason freeradius cannot execute it, and therefore it cannot process authrosation request, and thus rejects all requests. Pay attention to the section of the tutorial where you change the authorisation method to SQL. Make sure that all the IP's you type in the config files are correct; if the IP is on the server itself then it is usually best to use the loopback address 127.0.0.1, make sure that the username and password you put in the config file are valid MySQL credentials (may be obvious, but remember that MySQL has its own sets of users with their corresponding passwords, and the user and password with which you instruct freeradius to acess the mysql database must be valid AND must have read and write privileges on the database). It is things like this that I would look at in detail.
So, tell me how you progress!