Using privileged containers are discouraged by upstream LXD, and due to
several incompatibilities with systemd over the years, systemd +
priveleged LXD containers is generally "use at your own risk."

In particular, mount denials like this would come up a lot. I think some
kind of apparmor workaround (like you have apparently already applied)
is your best path forward here.

** Changed in: systemd (Ubuntu)
       Status: New => Invalid

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https://bugs.launchpad.net/bugs/2166624

Title:
  System hang caused by systemd-logind wall broadcast retry loop into
  privileged LXD containers

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