Looks like SE Linux is the culprit, thanks. For some reason though, I get
su: user root does not exist
when I try to su to the root account. Root is there in the passwd and shadow file, so it should work.
I am also having a lot of hassles getting SELinux to let me through, I am not turning SELinux off, sshd access must be configurable somehow. I will post back here if I figure it out.