I have a .ppk file. I put it to the .ssh folder, but when I try to clone, the server prompts for a password.
I did it on OS X. I convert .ppk to .pem. The result was the same. After that I generate key on my machine. Public key was added to the server. Nothing has changed.
I used command: hg clone ssh://user@hostname localpackage
~/.ssh/config:
Host shortname
Hostname hostname
User username
IdentityFile ~/.ssh/keyname