I\'ve just setup my EC2 server following this video here exactly - http://www.youtube.com/watch?v=bBajLxeKqoY
I even chose the same server type, everything went well
In my case, the problem was the file's break type. Try this:
1.- Open the .pem file with TextWrangler
2.- At Bottom of app, verify if the Break Type is "Windows(CRLF)".
Regards