With the release of bootc 1.12.0 a regression was introduced preventing bootc-image-builder from turning containers that have this version of bootc in them into disk images as the install-to-filesystem call fails.
See this bootc issue: bootc-dev/bootc#1907
Posting here (and in image-builder) so people can find this more easily.
Note that this is a different regression from the previous one (#410) in bootc 1.11.0 so downgrading would result in installers not working.