You should consider applying the Solaris8 patch 112438 which provides
a kernel based /dev/random and /dev/urandom interface so that openssh
and openssl can run without prngd.

However, if you want to stick with prngd I would guess the error message
below is because you are not actually running prngd.

According to Szymon Pindral:
[ Charset ISO-8859-2 unsupported, converting... ]
> Hi,
>
> I tried to install OpenSSH 3.4p1 on Sun Solaris 8.
> After download I installed belong patches:
> - openssh-3.4p1-sol8-sparc-local
> - openssl-0.9.6g-sol8-sparc-local
> - prngd-0.9.25-sol8-sparc-local
> - tcp_wrappers-7.6-sol8-sparc-local
> - zlib-1.1.4-sol8-sparc-local
> - egd-0.8-sol8-sparc-local
> - libgcc-3.2-sol8-sparc-local
> - perl-5.6.1-sol8-sparc-local
>
> Follow instruction I made /var/empty directory with special rights:
> useradd -g sshd -c 'sshd priv sep' -d /var/empty -s /bin/false sshd
>
> Next step was to create /etc/hosts.deny and /etc/host.allow files to setup tcp_wrappers.
>
> The final step was to run the command:
> ssh-keygen -t rsa1 -f /usr/local/etc/ssh_host_key -N ""
>
> after this command i recive message: PRNG is not seeded.
>
> How to solve this problem ??
> Can You help me
>
> Regards
>
> Szymon
>