It sounds like there are some problems with permissions and/or firewall settings. Check to make sure the users on the linux server are authorized.
See http://wiki.centos.org/HowTos/Network/SecuringSSH
Also you may want to check your OSX firewall settings to see if the macfusion is somehow blocked.
I'd also try using a terminal and connecting via SSH to see if that works at a very basic level.