Hi,
I recreated the issue using the Ubuntu upstream kernel builds at
  http://kernel.ubuntu.com/~kernel-ppa/mainline/daily/current/

After launching a 18.04 instance, and then installing those kernels
and rebooting (generic_4.20.0-999.201811252100) I saw the issue.

I noticed that cloud-init's /var/lib/cloud data was getting messed up,
which didn't make any sense.   The problem that I noticed was 
/var/lib/cloud/instance was a directory rather than a symlink.
It turns out that the problem was walinuxagent was deleting the 
/var/lib/cloud during boot. somewhere before cloud-init modules that
was getting deleted and was wreaking havoc on cloud-init.

It looks like this is at least identified as not the best idea at:
 https://github.com/Azure/WALinuxAgent/commit/f42d2e75617bb54

I verified that cloud-init was working properly by itself with:
  systemctl disable walinuxagent
before the reboot into the new kernel.  All was well.
On reboot, cloud-init still used the azure datasource and had a single
entry in /var/lib/cloud/instances/

So, I'm marking this 'Invalid' for cloud-init.  The fix needs to be
to have walinuxagent stop deleting state from other programs.


** Also affects: walinuxagent (Ubuntu)
   Importance: Undecided
       Status: New

** Changed in: cloud-init
       Status: Confirmed => Invalid

** Changed in: walinuxagent (Ubuntu)
       Status: New => Confirmed

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https://bugs.launchpad.net/bugs/1803173

Title:
  cloud-init disables user on azure at second reboot

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