If I understand correctly:
(1) You have successfully logged in to the machine on which your Linode is hosted and are therefore accessing the (virtual) console of your Linode.
(2) You are unable to log in as root on the virtual console.
If this is the case then sshd configuration has nothing to do with your inability to log in - ssh (on the Linode host) has successfully connected you to the (virtual) console (when you logged in to host
xx.linode.com) and has no part to play in authenticating logins at the virtual console.
It looks like either the password you are using is incorrect or something has gone seriously wrong with the authentication setup on your Linode.
Your inability to su from another account is likely due to the same cause. Many Linux flavours require regular users to be a member of a particular group (usually 'wheel', but it varies) before they are allowed to su, but if the authentication data for root is screwed up then su isn't going to work anyway.