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With a minimum server install of including (zfs, xen-hypervisor-amd64,
nfs-common, and lxd).

When I create a privileged container - it works fine.
When I create an unprivileged container - it won't start with

# lxc info --show-log test | grep ERROR
            lxc 20160822115926.073 ERROR    lxc_utils - utils.c:safe_mount:1692 
- Operation not permitted - Failed to mount proc onto 
/usr/lib/x86_64-linux-gnu/lxc/proc
            lxc 20160822115926.073 ERROR    lxc_conf - 
conf.c:lxc_mount_auto_mounts:743 - Operation not permitted - error mounting 
proc on /usr/lib/x86_64-linux-gnu/lxc/proc flags 14
            lxc 20160822115926.073 ERROR    lxc_conf - conf.c:lxc_setup:3721 - 
failed to setup the automatic mounts for 'test'
            lxc 20160822115926.073 ERROR    lxc_start - start.c:do_start:833 - 
failed to setup the container
            lxc 20160822115926.073 ERROR    lxc_sync - sync.c:__sync_wait:57 - 
An error occurred in another process (expected sequence number 3)
            lxc 20160822115926.073 ERROR    lxc_start - 
start.c:__lxc_start:1353 - failed to spawn 'test'

# uname -a
Linux xen 4.4.0-34-generic #53-Ubuntu SMP Wed Jul 27 16:06:39 UTC 2016 x86_64 
x86_64 x86_64 GNU/Linux

# lsb_release -rd
Description:    Ubuntu 16.04.1 LTS
Release:        16.04

Tool versions
# apt-cache policy zfsutils-linux
zfsutils-linux:
  Installed: 0.6.5.6-0ubuntu12
  Candidate: 0.6.5.6-0ubuntu12
  Version table:
 *** 0.6.5.6-0ubuntu12 500
        500 http://gb.archive.ubuntu.com/ubuntu xenial-updates/main amd64 
Packages
        100 /var/lib/dpkg/status
     0.6.5.6-0ubuntu8 500
        500 http://gb.archive.ubuntu.com/ubuntu xenial/universe amd64 Packages

# apt-cache policy xen-hypervisor-4.6-amd64
xen-hypervisor-4.6-amd64:
  Installed: 4.6.0-1ubuntu4.1
  Candidate: 4.6.0-1ubuntu4.1
  Version table:
 *** 4.6.0-1ubuntu4.1 500
        500 http://gb.archive.ubuntu.com/ubuntu xenial-updates/universe amd64 
Packages
        500 http://security.ubuntu.com/ubuntu xenial-security/universe amd64 
Packages
        100 /var/lib/dpkg/status
     4.6.0-1ubuntu4 500
        500 http://gb.archive.ubuntu.com/ubuntu xenial/universe amd64 Packages

# apt-cache policy nfs-common
nfs-common:
  Installed: 1:1.2.8-9ubuntu12
  Candidate: 1:1.2.8-9ubuntu12
  Version table:
 *** 1:1.2.8-9ubuntu12 500
        500 http://gb.archive.ubuntu.com/ubuntu xenial/main amd64 Packages
        100 /var/lib/dpkg/status

# apt-cache policy lxd
lxd:
  Installed: 2.0.3-0ubuntu1~ubuntu16.04.2
  Candidate: 2.0.3-0ubuntu1~ubuntu16.04.2
  Version table:
 *** 2.0.3-0ubuntu1~ubuntu16.04.2 500
        500 http://gb.archive.ubuntu.com/ubuntu xenial-updates/main amd64 
Packages
        100 /var/lib/dpkg/status
     2.0.2-0ubuntu1~16.04.1 500
        500 http://security.ubuntu.com/ubuntu xenial-security/main amd64 
Packages
     2.0.0-0ubuntu4 500
        500 http://gb.archive.ubuntu.com/ubuntu xenial/main amd64 Packages


I've another system, which is very similar but without Xen installed, which 
doesn't have the same issue with creating unprivileged containers. It would 
seem that it is probably some clash between the two (also suggested in 
http://unix.stackexchange.com/questions/296998/create-lxd-containers-on-machine-with-no-internet-connection)

** Affects: linux (Ubuntu)
     Importance: Undecided
     Assignee: Seth Forshee (sforshee)
         Status: New

-- 
Can not start unprivileged container on host with Xen
https://bugs.launchpad.net/bugs/1615593
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