Password in cloud-init doesn't seem to work, default one does though (for ubuntu)

LXD
2

I made a lxd profile for cloud-init:

config:
  user.user-data: |
    #cloud-config
    hostname: foo
    users:
      - default
      - name: user
    ssh_pwauth: false
    disable_root: false
    chpasswd:
      list: |
        ubuntu:linux
        user:password
      expire: false
description: Default LXD profile
devices:
  eth0:
    name: eth0
    network: lxdbr0
    type: nic
  root:
    path: /
    pool: default
    type: disk
name: cloud-init
used_by: []

Then:

lxc launch images:ubuntu/focal/cloud uvm1 --vm --profile=cloud-init
lxc console uvm1 --type=vga

IIRC I had trouble setting crypted pass as well. This is not secure way, but I just wanted to tryout cloud-init. Althou this is not what you asked for, it might suit you depending on your needs, or until someone else answer your exact question…