I am not sure, but this could also be related to the problem described here:
https://wiki.archlinux.org/title/Linux_Containers#Enable_support_to_run_unprivileged_containers_(optional)
Basically systemd switched to cgroup v2 and the normal method under Arch is not compatible to that.
So you can either switch to cgroup v1, which is described in the wiki or see
this: Pam_cgfs How to setup with cgroup v2? for using cgroup v2.