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.