/etc/tor/torsocks.conf not working

Tor does not actually make any attempt to verify the authentication information that a SOCKS client provides to it. It can be used entirely unauthenticated, and it has no configuration to force authentication. As such, you are strongly recommended to not expose the SOCKS port to any IP address that you don't want connecting directly to it.

From the man page:

       NOTE: Although this option allows you to specify an IP address
       other than localhost, you should do so only with extreme caution.
       The SOCKS protocol is unencrypted and (as we use it)
       unauthenticated, so exposing it in this way could leak your
       information to anybody watching your network, and allow anybody to
       use your computer as an open proxy.

What Tor does do with the authentication information is stream isolation. Tor can be configured to use completely different circuits for clients which "authenticate" with different credentials.

       IsolateSOCKSAuth
           Don’t share circuits with streams for which different SOCKS
           authentication was provided. (On by default; you can disable it
           with NoIsolateSOCKSAuth.)