I am trying to explain with the help of a working scenario

1. Generate the public key in ‘puttygen’ key generator application

2. Type a password as required

3. Save private key as a file with extension .ppk

4. When Create VM from Azure portal, make sure that you put a username and SSH Public key in the following boxes.

5. Once the VM creation is completed in Azure portal, connect the VM with Putty. Assign the ppk file and type the username, password. Username is the name you typed in Azure portal while doing the VM creation and password is the password you typed while creating the Private key in Putty Gen

Hope, the steps will help you

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