I can't reproduce it either. I used alpine:3.24.1 and openssh is openssh-server-10.3_p1-r2
I tried adding PermitRootLogin yes and PasswordAuthentication yes. Tried adding another user with a valid password.
Verified shadow entry has a *. Can't login as root or a test user. Tried another incorrect password first as well.
edit: can reproduce after `git revert 384e25e6bd1f2e7b30095900e48b570d46953510` in aports and rebuilding openssh without the fix. It also accepts the password on the 2nd+ attempt, NOT the first.