Let me preface this with: I'm not sure this is a bootc bug but we would appreciate help/feedback/suggestions.

The osbuild issue is in osbuild/image-builder-cli#410, the tl;dr is below:
In the bootc-image-builder ISOs we use the following kickstart fragment:

%post
bootc switch --mutate-in-place --transport registry quay.io/centos-bootc/centos-bootc:stream10

this recently started to fail with:

error: Switching: Initializing storage: System not booted via bootc

a few days/weeks ago and was only noticed recently.

We would greatly appreciate guidance what we should do, i.e. if we need another way to connect the installed system to the bootc ref or if there is a fix in bootc require to be less strict about this check.

https://issues.redhat.com/browse/RHEL-136234