You were right: FATAL ERROR: create_inode: failed to create hardlink, because Operation not permitted.
I’ve made changes to BeegFS to create symlinks when hardlinks are requested; this got me past this issue. Sadly the next issue was
Error: Failed instance creation: Failed creating instance from image: Unpack failed: Failed to run: unsquashfs -f -d /var/snap/lxd/common/lxd/storage-pools/beegfs/containers/unified-tortoise/rootfs -n /var/snap/lxd/common/lxd/images/95f82d22bea6a0d20dc3c06a59929b768abd0c7243d5298c3973f1808688d117.rootfs: Process exited with non-zero value 2 (write_xattr: failed to write xattr security.capability for file /var/snap/lxd/common/lxd/storage-pools/beegfs/containers/unified-tortoise/rootfs/usr/bin/mtr-packet because extended attributes are not supported by the destination filesystem
Ignoring xattrs in filesystem
To avoid this error message, specify -no-xattrs)
I changed the LXD code to supply the -no-xattrs flag; after which the launch worked, however I can’t exec into the container as lxc exec just sits there doing nothing.
At this point I am afraid I need some help from the devs to know whether or not running lxd without xattrs and hardlinks is even supported.