Public bug reported:

After resizing a 16.04 VM on Azure, the VM is presented with a new
ephemeral drive (of a different size), which initially is NTFS
formatted. Cloud-init tries to format the appropriate partition ext4,
but fails because it is mounted. Cloud-init has unmount logic for
exactly this case in the get_data call on the Azure data source, but
this is never called because fresh cache is found.

Jun 27 19:07:47 azubuntu1604arm [CLOUDINIT] handlers.py[DEBUG]: start: 
init-network/check-cache: attempting to read from cache [trust]
Jun 27 19:07:47 azubuntu1604arm [CLOUDINIT] util.py[DEBUG]: Reading from 
/var/lib/cloud/instance/obj.pkl (quiet=False)
Jun 27 19:07:47 azubuntu1604arm [CLOUDINIT] util.py[DEBUG]: Read 5950 bytes 
from /var/lib/cloud/instance/obj.pkl
Jun 27 19:07:47 azubuntu1604arm [CLOUDINIT] stages.py[DEBUG]: restored from 
cache: DataSourceAzureNet [seed=/dev/sr0]
Jun 27 19:07:47 azubuntu1604arm [CLOUDINIT] handlers.py[DEBUG]: finish: 
init-network/check-cache: SUCCESS: restored from cache: DataSourceAzureNet 
[seed=/dev/sr0]
...
Jun 27 19:07:48 azubuntu1604arm [CLOUDINIT] cc_disk_setup.py[DEBUG]: Creating 
file system None on /dev/sdb1
Jun 27 19:07:48 azubuntu1604arm [CLOUDINIT] cc_disk_setup.py[DEBUG]:      Using 
cmd: /sbin/mkfs.ext4 /dev/sdb1
Jun 27 19:07:48 azubuntu1604arm [CLOUDINIT] util.py[DEBUG]: Running command 
['/sbin/mkfs.ext4', '/dev/sdb1'] with allowed return codes [0] (shell=False, 
capture=True)
Jun 27 19:07:48 azubuntu1604arm [CLOUDINIT] util.py[DEBUG]: Creating fs for 
/dev/disk/cloud/azure_resource took 0.052 seconds
Jun 27 19:07:48 azubuntu1604arm [CLOUDINIT] util.py[WARNING]: Failed during 
filesystem operation#012Failed to exec of '['/sbin/mkfs.ext4', 
'/dev/sdb1']':#012Unexpected error while running command.#012Command: 
['/sbin/mkfs.ext4', '/dev/sdb1']#012Exit code: 1#012Reason: -#012Stdout: 
''#012Stderr: 'mke2fs 1.42.13 (17-May-2015)\n/dev/sdb1 is mounted; will not 
make a filesystem here!\n'

$ lsb_release -rd
Description:    Ubuntu 16.04.1 LTS
Release:        16.04
$ cat /etc/cloud/build.info
build_name: server
serial: 20160721
~$ dpkg -l cloud-init
Desired=Unknown/Install/Remove/Purge/Hold
| Status=Not/Inst/Conf-files/Unpacked/halF-conf/Half-inst/trig-aWait/Trig-pend
|/ Err?=(none)/Reinst-required (Status,Err: uppercase=bad)
||/ Name                             Version               Architecture         
 Description
+++-================================-=====================-=====================-=====================================================================
ii  cloud-init                       0.7.7~bzr1256-0ubuntu all                  
 Init scripts for cloud instances

We're seeing ~100% repro of this bug on resize, where the only success
cases are caused by another bug that messes up fstab and prevents
mounting of the drive.

** Affects: cloud-init (Ubuntu)
     Importance: Undecided
         Status: New

** Attachment added: "cloud-init.log"
   
https://bugs.launchpad.net/bugs/1611074/+attachment/4716876/+files/cloud-init.log

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https://bugs.launchpad.net/bugs/1611074

Title:
  Reformatting of ephemeral drive fails on resize of Azure VM

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