Hi @shivani.bothra1620819956367, usually when there is an Auth Fail on the Data Transfer component where SFTP is involved, it's because the combo of username, password, and key are incorrect. I typically lean towards the key as it's the more complicated piece of the combo. Make sure your key doesn't have any spaces on the front or back of it as this will cause it to fail. I can't remember specifically how the validation works with the Data Transfer component when SFTP is involved but there is a good chance that it validates correctly while configuring but fails during run. The validation process that Matillion employs could just be making sure all the required fields have values. Meaning, it may not be validating an actual successful connection.
Again, if you are sure the username and password is correct, I would focus on the key. I hope this helps.