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PuTTY 0.61 attempts GSSAPI authentication by default, before asking the user for any other kinds of authentication such as passwords or key passphrases. If that authentication fails (which it does in the very common case where GSSAPI is not set up) it prints "Access denied" in the window, and then proceeds with other methods of authentication. The "Access denied" message is ugly, and also confusing: it has confused a few users into thinking that the entire authentication phase had failed, instead of just one method.
As of r9232, this is fixed, and the logging of authentication messages in both the PuTTY window and the Event Log has been generally cleaned up so that a message about authentication failure is only printed if a message had already been displayed indicating that that method was even being tried.
Audit trail for this bug.