OpenSSH service fails to start on azure provided WindowsServer offer on sku: 2019-datacenter-core-g2

Question

On the latest update deployed to the sku (17763.6414.241004) the sshd service fails to start.

Here is my installation script:

# echo "debug waiting"
# Start-Sleep -Seconds 3600

# add openssh server as windows capability
Add-WindowsCapability -Online -Name OpenSSH.Server~~~~0.0.1.0
echo "openssh server installed"

# Confirm the Firewall rule is configured. It should be created automatically by setup. Run the following to verify
if (!(Get-NetFirewallRule -Name "OpenSSH-Server-In-TCP" -ErrorAction SilentlyContinue | Select-Object Name, Enabled)) {
    Write-Output "Firewall Rule 'OpenSSH-Server-In-TCP' does not exist, creating it..."
    New-NetFirewallRule -Name 'OpenSSH-Server-In-TCP' -DisplayName 'OpenSSH Server (sshd)' -Enabled True -Direction Inbound -Protocol TCP -Action Allow -LocalPort 22
} else {
    Write-Output "Firewall rule 'OpenSSH-Server-In-TCP' has been created and exists."
}
echo "firewall rule created"
New-ItemProperty -Path "HKLM:\SOFTWARE\OpenSSH" -Name DefaultShell -Value "C:\Windows\System32\WindowsPowerShell\v1.0\powershell.exe" -PropertyType String -Force
echo "default cli set"

echo "done"
echo ""

if ($(Get-Service ssh-agent | Select-Object StartType).StartType -eq "Disabled") {
    Write-Output "ssh-agent service is disabled. Setting it to Manual."
    Get-Service -Name ssh-agent | Set-Service -StartupType Manual
}

# Start the sshd service
Start-Service sshd

# OPTIONAL but recommended:
Set-Service -Name sshd -StartupType 'Automatic'

The error log of the script on version 17763.6414.241004:

Path          :
Online        : True
RestartNeeded : False

openssh server installed
Firewall rule 'OpenSSH-Server-In-TCP' has been created and exists.
firewall rule created

DefaultShell : C:\Windows\System32\WindowsPowerShell\v1.0\powershell.exe
PSPath       : Microsoft.PowerShell.Core\Registry::HKEY_LOCAL_MACHINE\SOFTWARE\OpenSSH
PSParentPath : Microsoft.PowerShell.Core\Registry::HKEY_LOCAL_MACHINE\SOFTWARE
PSChildName  : OpenSSH
PSDrive      : HKLM
PSProvider   : Microsoft.PowerShell.Core\Registry

default cli set
done

ssh-agent service is disabled. Setting it to Manual.
Start-Service : Service 'OpenSSH SSH Server (sshd)' cannot be started due to the following error: Cannot start service
sshd on computer '.'.
At C:\Windows\Temp\script-67064342-7603-a1fd-d79e-c600276fad38.ps1:28 char:1
+ Start-Service sshd
+ ~~~~~~~~~~~~~~~~~~
    + CategoryInfo          : OpenError: (System.ServiceProcess.ServiceController:ServiceController) [Start-Service],
   ServiceCommandException
    + FullyQualifiedErrorId : CouldNotStartService,Microsoft.PowerShell.Commands.StartServiceCommand

The output of this same script on sku version 17763.6293.240905:

Path          :
Online        : True
RestartNeeded : False
openssh server installed
Firewall rule 'OpenSSH-Server-In-TCP' has been created and exists.
firewall rule created
DefaultShell : C:\Windows\System32\WindowsPowerShell\v1.0\powershell.exe
PSPath       : Microsoft.PowerShell.Core\Registry::HKEY_LOCAL_MACHINE\SOFTWARE\OpenSSH
PSParentPath : Microsoft.PowerShell.Core\Registry::HKEY_LOCAL_MACHINE\SOFTWARE
PSChildName  : OpenSSH
PSDrive      : HKLM
PSProvider   : Microsoft.PowerShell.Core\Registry
default cli set
done
ssh-agent service is disabled. Setting it to Manual.

I can confirm that both of these scripts ran on a fresh agent deployed by packer azure-arm.

The precise identifier of the base image is:

image_publisher = "MicrosoftWindowsServer"
image_offer     = "WindowsServer"
image_sku       = "2019-datacenter-core-g2"
# image_version = "17763.6293.240905" working version
# image_version = "17763.6414.241004" latest (broken) version