I guess you’re running proxmox since its a -pve kernel?
If so, it will give you this error because the server isnt allowed nesting virtualization, i belive you can enable “nesting” on proxmox somewhere
Well spotted. The combination of OS and kernel looks like Ubuntu is running in a lxc container and not in a vm.
Proxmox allows to set wether a lxc container is unpriviliged or not. Only Unprivilged lxc containers allow to enable the feature nesting. Seems the unprivilged setting can only be selected when creating the lxc container.
Update: I just tested it → an unprivliged lxc container with nesting feature enabled does the trick. If the nesting feature is disabled, the error message is the same as your. With a privliged lxc container I get an error regarding a missing apparmor profile.