I don't use coreos/systemd but some people run into issues like this: https://github.com/dotcloud/docker/issues/3629

Well, that involves running a weird nested stack: The CoreOS systemd, wrapped around a bunch of docker instances, one of which is trying to run the arch Linux systemd inside the container as well.

For what it's worth, Docker containers are generally not complete running machines with their own init system. Instead, they're typically a single top-level process running in an isolated container. Basically, they work more like a Heroku app than complete EC2 machine image.

Exactly. I don't expect Upstart or even SysV init (in the configuration as provided by distributions) to work well inside Docker either.

For an example how you should build a Docker container, take a look at http://phusion.github.io/baseimage-docker/

systemd post 204 requires that it is the only cgroups writer, and tramples over every other writer. Some have said that this is because of a decision by upstream kernel maintainers to allow only one cgroups writer, but this decision has not yet happened. Do you know what version of systemd coreOS uses?