Why not. Double check there's not already an opened issue for this in XO bugtracker, otherwise, create it there

What does your cloud config logs show on the guest OS after boot? Can you see if it has made any attempt to inject the config? Only thing I can think of is that your cloud config might be wrong thus the cloud init service is refusing it. Have you tried to use an ubuntu image? I used official images of both debian 10 and ubuntu 18.04 and worked fine once I got rid of the pre-populated network config or inserted a real network config. I spent too long trying to figure out what was going on so let me know if there's anything else you need to know, it's super frustrating.