I'm not 100% sure what the exact problem might be, but on face value, it looks to me like some sort of filesystem issue. I say that because of the failure of init-fence with the error message:

Transport endpoint is not mounted

That suggests that the root filesystem wasn't mounted properly.

It does appear that it was going ok, then hit an issue with the filesystem. My first guess is that the host volume has run out of free space. Unless you're paying close attention, it's quite easy to over allocate disk space when using LXC containers.

If you have plenty of free space on the volume (usually LVM thin) you are using LXC containers, then the next thing I'd recommend is doing an fsck on the host disk(s) as this behavior may be indicative of a failing hard drive. If you have plenty of free space, I suspect at least some filesystem corruption has occurred.

If you have plenty of free space and the fsck comes back clean, then that does suggest something a little less straight forward. Could you please try launching an instance of TurnKey Core? If that also fails in a similar way, please try launching an instance of the vanilla Debian Bullseye container. If that also fails in a similar way too, then it's almost definitely some sort of issue with the host system. Please let me know how this goes either way.

When I get a chance, I'll try launching one on my local Proxmox too and see if I can recreate your issue. I'll post back either way.

Please let me know how you go. Hopefully is as simple as run out of free space.