Yup, remove the hashtag and change it to “yes”, then restarting the sshd service should let it kick in.
By the way, you can always check what methods are allowed with -o PreferredAuthentications=none. It’s not pretty, but it will give you an error telling you the methods 
ssh 192.168.1.2 -o PreferredAuthentications=none
Permission denied (publickey,password,keyboard-interactive).