The cause of this issue is that NTP authentication is not enabled on the router. The commands shown in the exhibit only define the authentication key and mark it as trusted, but they do not enable NTP authentication globally or on a per-peer basis. To enable NTP authentication globally, the command ntp authenticate must be used. To enable NTP authentication on a per-peer basis, the command ntp server ip-address key key-id or ntp peer ip-address key key-id must be used, where key-id is the same as the one defined by the ntp authentication-key command. Without enabling NTP authentication, any device can synchronize time with this router, regardless of whether it has the same authentication key or not.
The other options are incorrect because:
* The key was configured in plain text, but this is not the cause of the issue. Although it is recommended to use the ntp authentication-key key-id md5 key [encrypted] command to encrypt the key, using plain text does not prevent NTP authentication from working, as long as the same key is configured on both the router and the peer.
* The hashing algorithm that was used was MD5, which is supported by NTP. MD5 is the default algorithm for NTP authentication and it can be used with any key length from 1 to 16 characters. Other algorithms, such as SHA and SHA1, are also supported by NTP if the OpenSSL library is installed, but they are not required for NTP authentication to work.
* The router was not rebooted after the NTP configuration updated, but this is not necessary for NTP authentication to take effect. NTP authentication is applied immediately after the configuration commands are entered, and no reboot is required.
References:
Configuring NTP
Authentication Support
NTP Authentication Explained