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:
systemd.unified_cgroup_hierarchy=false
Then:
sudo update-grub