You need to start the sshd service on the server, not on the client. Once the service is running, you can ssh in from the client.
From the server, as root:
/etc/init.d/sshd start
From the client:
ssh server-ip
If you then get a connection refused error, it probably means that, either the service is not running (or not properly configured to accept incoming connections) or the firewall running on the server rejects the connection before it reaches the ssh service.
The "sshd re-exec requires execution with an absolute path" error means that "sshd" is not called with an absolute path in the script. You need to replace the sshd with /usr/bin/sshd as gauravbajaj suggested.
Could you post the results of the previous commands? HTH.