I did do some more reading and finally got radius to authenticate mschap, I am using the users file to add users for the time being and no SQL. A user can authenticate properly
Going to the next request
Waking up in 4.9 seconds.
Cleaning up request 3 ID 100 with timestamp +136
Ready to process requests.
rad_recv: Access-Request packet from host 127.0.0.1 port 57868, id=101, length=132
Service-Type = Framed-User
Framed-Protocol = PPP
User-Name = "test"
MS-CHAP-Challenge = 0x65c4689b30c27f604fcca7ba1370fdba
MS-CHAP2-Response = 0x31004bfca25ae57e8617e1e2d3cebde289040000000000000000c4cd490b424b34bfa53ad8b65fb786d994c6f647dbdd001a
NAS-IP-Address = 127.0.0.1
NAS-Port = 0
# Executing section authorize from file /etc/raddb/sites-enabled/default
+- entering group authorize {...}
++[preprocess] returns ok
++[chap] returns noop
[mschap] Found MS-CHAP attributes. Setting 'Auth-Type = mschap'
++[mschap] returns ok
++[digest] returns noop
[suffix] No '@' in User-Name = "test", looking up realm NULL
[suffix] No such realm "NULL"
++[suffix] returns noop
[eap] No EAP-Message, not doing EAP
++[eap] returns noop
[files] users: Matched entry test at line 76
++[files] returns ok
++[expiration] returns noop
++[logintime] returns noop
[pap] WARNING: Auth-Type already set. Not setting to PAP
++[pap] returns noop
Found Auth-Type = MSCHAP
# Executing group from file /etc/raddb/sites-enabled/default
+- entering group MS-CHAP {...}
[mschap] Creating challenge hash with username: test
[mschap] Told to do MS-CHAPv2 for test with NT-Password
[mschap] adding MS-CHAPv2 MPPE keys
++[mschap] returns ok
# Executing section post-auth from file /etc/raddb/sites-enabled/default
+- entering group post-auth {...}
++[exec] returns noop
Sending Access-Accept of id 101 to 127.0.0.1 port 57868
Service-Type = Framed-User
Framed-Protocol = PPP
Framed-IP-Address = 172.16.3.33
Framed-IP-Netmask = 255.255.255.0
Framed-Routing = Broadcast-Listen
Framed-Filter-Id = "std.ppp"
Framed-MTU = 1500
Framed-Compression = Van-Jacobson-TCP-IP
MS-CHAP2-Success = 0x31533d43303035333346323444353031324334354144323433334634334344343931374636363944453733
MS-MPPE-Recv-Key = 0x494fa970f9bb475a70b1b37179089b1d
MS-MPPE-Send-Key = 0x546cdc52da0bf3818284fe5e6c48332d
MS-MPPE-Encryption-Policy = 0x00000002
MS-MPPE-Encryption-Types = 0x00000004
Finished request 4.
May 23 13:30:01 pptp-test-100-13 pppd[7512]: rc_check_reply: received invalid reply digest from RADIUS server
Any input please ?