As reported and discussed in this Launchpad bug:

https://bugs.launchpad.net/nova/+bug/2091114

The flatcar partition table defines both an EFI System partition with the legacy_boot flag set and a BIOS boot partition. This makes recent image validation checks in Nova to reject the image and refuse to boot it.

The fix in this case is to simply remove the legacy_boot flag from the EFI system partition.