This bug was fixed in the package nova-lxd - 14.2.2-0ubuntu0.16.10.2

---------------
nova-lxd (14.2.2-0ubuntu0.16.10.2) yakkety; urgency=medium

  * d/p/bug1691428-ocata.patch: Cherry pick fix to ensure that readonly
    flag for config-drive device is correctly passed to LXD
    (LP: #1691428).

nova-lxd (14.2.2-0ubuntu0.16.10.1) yakkety; urgency=medium

  * New upstream point release for Openstack Newton (LP: #1673411)

 -- James Page <[email protected]>  Wed, 17 May 2017 11:12:17 +0100

** Changed in: nova-lxd (Ubuntu Yakkety)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/1673411

Title:
  config-drive support is broken

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