Just hit this same problem adding the Puppetlabs PC1 repo. As far as I
can tell, the key is deployed, but apt hasn't been updated to use it.

Installation halts at the "select packages" phase. At this point, if I
chroot into /target, the Puppet Labs GPG key is present but if I try to
install puppet-agent, it shows as unauthenticated.

If I run apt-get update and THEN try the install, puppet-agent is
installed OK.

Can confirm that the workaround still works (make PC1 the local1 repo).

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https://bugs.launchpad.net/bugs/1553121

Title:
  Xenial preseed fails to load key for 3rd party repo with apt-
  setup/local0/key

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