Recreating the RADIUS server profile did the trick. (actually, changed the timeout and retry from 3 to 2 and pushed from panorama). The system log now says it switched to PAP for that radius server.
That's a nasty bug... Never would have tought 'touching' the radius config could fix the issue...
Woop woop.. From the PAN-OS 7.0.4 release notes:
Added a new CLI operational command ( set authentication radius-auth-type <auto|chap|pap> ) to address an incompatibility issue between PAN-OS and some RADIUS servers. With this fix, you can manually override the automatic selection mechanism introduced with Challenge-Handshake Authentication Protocol (CHAP) support in PAN-OS 7.0 to select either CHAP or Password Authentication Protocol (PAP) as needed.
TLDR; CLI command set authentication radius-auth-type <auto|chap|pap>
Well, even from the CLI, it doesn't seem to take the command.
Entering configuration mode
rbista@MyFirewall# set authentication radius-auth-type chap
Any suggestions? I ran the command # find command keyword "radius-auth-type", it display the command though.
rbista@MyFirewall> find command keyword "radius-auth-type"
set authentication radius-auth-type <auto|chap|pap>
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