This isn’t specific a standalone or clustered LXD setups, it is to do with the cgroup setup of the LXD host compared to what the image you’re trying to use requires.
Running older container OSes on more modern host systems that use CGroupV2 can produce this conflict.
To resolve it you need to boot your host system into CGroupV1 mode by modifying your kernel’s boot arguments to include:
Iam having the same issue. When trying to start an old os like centos 7 on ubuntu 22. Iam having this message " * Notice: Starting instance Error: The image used by this instance requires a CGroupV1 host system"
I also tried to modify the grup like this : #vi /etc/default/grub
GRUB_CMDLINE_LINUX=“systemd.unified_cgroup_hierarchy=false”
update-grub