I installed the NX server (GPL Ed.) on a Kanotix box, and the NX client on another Kanotix box. The message from "nxsetup" said to copy /home/.nx/.ssh/client.id_dsa.key on the server to /usr/NX/share/ on the client, overwriting the one there.
No, you don't need to do that. That's why you get the "NX> 205 Enter passphrase for key '/usr/NX/share/client.id_dsa.key':" error. Hope you have the original back up.

What you need to do is recreate nomachine key on the server side..
nxsetup --setup-nomachine-key

after you create nx user and their password:

nxserver --useradd NEW_USER
nxserver --passwd NEW_USER