That's very strange, it's finding the nocloud drive, mounting it, and pulling the config files off of it. Interestingly, it's finding a network-config file and trying to read it, then it looks like it decides it doesn't like the formatting, and decides to ignore the whole nocloud drive config source:
2020-08-24 12:36:22,816 - util.py[DEBUG]: Running command ['mount', '-o', 'ro', '-t', 'auto', '/dev/xvdb', '/run/cloud-init/tmp/tmpy_922uof'] with allowed return codes [0] (shell=False, capture=True)
2020-08-24 12:36:22,830 - util.py[DEBUG]: Reading from /run/cloud-init/tmp/tmpy_922uof//user-data (quiet=False)
2020-08-24 12:36:22,830 - util.py[DEBUG]: Read 109 bytes from /run/cloud-init/tmp/tmpy_922uof//user-data
2020-08-24 12:36:22,831 - util.py[DEBUG]: Reading from /run/cloud-init/tmp/tmpy_922uof//meta-data (quiet=False)
2020-08-24 12:36:22,831 - util.py[DEBUG]: Read 50 bytes from /run/cloud-init/tmp/tmpy_922uof//meta-data
2020-08-24 12:36:22,831 - util.py[DEBUG]: Reading from /run/cloud-init/tmp/tmpy_922uof//vendor-data (quiet=False)
2020-08-24 12:36:22,831 - util.py[DEBUG]: Reading from /run/cloud-init/tmp/tmpy_922uof//network-config (quiet=False)
2020-08-24 12:36:22,831 - util.py[DEBUG]: Read 104 bytes from /run/cloud-init/tmp/tmpy_922uof//network-config
2020-08-24 12:36:22,831 - util.py[DEBUG]: Running command ['umount', '/run/cloud-init/tmp/tmpy_922uof'] with allowed return codes [0] (shell=False, capture=True)
2020-08-24 12:36:22,838 - util.py[DEBUG]: Attempting to load yaml from string of length 50 with allowed root types (<class 'dict'>,)
2020-08-24 12:36:22,839 - util.py[DEBUG]: Attempting to load yaml from string of length 104 with allowed root types (<class 'dict'>,)
2020-08-24 12:36:22,839 - util.py[DEBUG]: loaded blob returned None, returning default.
2020-08-24 12:36:22,839 - handlers.py[DEBUG]: finish: init-local/search-NoCloud: FAIL: no local data found from DataSourceNoCloud
2020-08-24 12:36:22,839 - util.py[WARNING]: Getting data from <class 'cloudinit.sources.DataSourceNoCloud.DataSourceNoCloud'> failed
2020-08-24 12:36:22,844 - util.py[DEBUG]: Getting data from <class 'cloudinit.sources.DataSourceNoCloud.DataSourceNoCloud'> failed
You said you were commenting out lines in the network config box, I might take a guess that that gets written to the config drive, and cloud-init tries to read it. Since it wants strict yaml, it's probably failing on those # characters. Can you try leaving the network config box in XOA COMPLETELY empty? (not even a space)