When booting using an initramfs with etc.transient set to true, ostree-prepare-root.service fails here when attempting to create the transient etc in /run/ostree.
I believe this may have been introduced by 416f2c3. The value of ovldir is created as a directory if it does not exist here, and then again here because it is unconditionally added to the array here.
I think ovldir just needs to be removed from the array.