Comment 10 for bug 1618572

Here is some information on how to reproduce this.
I use uvt-kvm, just as an easy way to get a remote system to work with.
I assume that any boot of xenial or yakkety will reproduce the problem.

The failure shows itself in a couple different ways:
a.) original report: apt-key add my.pubkey
  This show error messages and exit non-zero.

b.) console error logs with cloud-init failing renames
  Note, these will not get to /var/log/cloud-init.log due to where they
  get raised.
    OSError: [Errno 116] Stale file handle: '/var/lib/cloud/data/tmpj6uweivq' -> '/var/lib/cloud/data/status.json'

c.) reproduce with atomic_write.py (see attached)
   sudo ./atomic_write.py /var/lib/cloud/data/status.json
   Very interestingly most file paths do not fail, but that one does.

4.2 (linux-virtual-lts-wily) passes, 4.4 fails (yakkety or xenial).

## Sync yakkety images to your uvt
uvt-simplestreams-libvirt -vv sync --source http://cloud-images.ubuntu.com/daily 'release~yakkety'

## put the key in my.pubkey locally
cat > my.pubkey <<"EOF"
-----BEGIN PGP PUBLIC KEY BLOCK-----
Version: SKS 1.1.5
Comment: Hostname: keyserver.ubuntu.com

mI0ETxf8lwEEAMAqtJVUnlCVzjTOsohaE/M4mGHFl4Py1cuE9ryOgmTWje+6BrNjtWLSfTQJ
Kp1V6hViUoxPBck1qkZoAz7VU5nDuBWDybCsolliUX4zzTYNiDnPS74fs4CDUWx9qpl5Sdb6
7aygIid/mFXubhJnTPR6Bq9ptGmc0Ks6ttNs3WJ/ABEBAAG0IkxhdW5jaHBhZCBQUEEgZm9y
IE1hYVMgTWFpbnRhaW5lcnOIuAQTAQIAIgUCTxf8lwIbAwYLCQgHAwIGFQgCCQoLBBYCAwEC
HgECF4AACgkQXP8eqZPujMU2zQP/W9OCzaU7HvFrqEt6nHGej2PEanIunxo7J8D5OR+Yl578
FpRkHRgvcdQnGuZUpdBnOFatDDFME7ClN9qUrD1wDN1r9ip2luaKiO2cZOW4Uu5Z0n/3Qc6J
eh9TNspyDMuHVVZ5GiAk+GXgF1m7ps5lCnOCZK/pXUEEUOS8AWnt3sM=
=1RpZ

-----END PGP PUBLIC KEY BLOCK-----
EOF

# launch a guest
name="sm-y1"
uvt-kvm create "$name"

# wait for it to come up
uvt-kvm wait --insecure "$name"

# add the key file for easy use there.
uvt-kvm ssh --insecure "$name" "cat > my.pubkey" <<my.pubkey

# ssh in
uvt-kvm ssh --insecure "$name"

## add trusty and get wily kernel where this is not an issue.
## This installs us a 4.2.0 kernel (currently 4.2.0-42-generic)
% echo "deb http://archive.ubuntu.com/ubuntu trusty-updates main" | sudo tee -a /etc/apt/sources.list.d/trusty.list
% sudo apt-get update -q
% sudo eatmydata apt-get install -qy -t trusty-updates linux-virtual-lts-wily
% ls /boot/vmlinuz*
/boot/vmlinuz-4.2.0-42-generic /boot/vmlinuz-4.4.0-36-generic

##
## make 'grub-reboot' work.
##
% sudo sed -i 's,^GRUB_DEFAULT=.*,GRUB_DEFAULT=saved,' /etc/default/grub /etc/default/grub.d/*

% grep -r GRUB_DEFAULT /etc/default/grub /etc/default/grub.d/*
/etc/default/grub:GRUB_DEFAULT=saved

% sudo update-grub
% sudo grub-set-default 0

## Set grub to reboot into the kernel you want.
#
# Assuming you want kernel 4.4.0-36-generic, to boot into that do:
sudo sh -c 'grub-reboot "$0"' "Advanced options for Ubuntu>Ubuntu, with Linux 4.4.0-36-generic"

# if you're already in overlayfs, you need to modify the root
# so you need overlayroot-chroot
sudo overlayroot-chroot sh -c 'grub-reboot "$0"' "Advanced options for Ubuntu>Ubuntu, with Linux 4.4.0-36-generic"

# then reboot

## Toggle overlayroot on or off
#
# to turn off:
sudo overlayroot-chroot rm /etc/overlayroot.local.conf

# to turn *on*
echo overlayroot=tmpfs:recurse=0 | sudo tee /etc/overlayroot.local.conf