After some experimentation it appears that devtool does not like running from a filesystem volume that does not contain my home directory.
My current setup on a virtualized host has the following volumes:
Filesystem Size Used Avail Use% Mounted on
udev 32G 0 32G 0% /dev
tmpfs 6.3G 5.7M 6.3G 1% /run
/dev/sda 25G 11G 13G 46% /
tmpfs 32G 0 32G 0% /dev/shm
tmpfs 5.0M 0 5.0M 0% /run/lock
tmpfs 32G 0 32G 0% /sys/fs/cgroup
/dev/sdc 148G 39G 102G 28% /mnt/YB
tmpfs 6.3G 0 6.3G 0% /run/user/1000
My home directory is located on /dev/sda - devtool works for yocto projects on this volume
/dev/sdc - I added this volume so that I'd have more space while using yocto, but devtool complains and doesn't run here. I deleted the contents of /dev/sdc and re-tried following the tutorial given in my initial post. I can reproduce (e.g. create and run qemuarm images) everything upto the step where devtool needs to be used.
The short term solution would be to increase the size of /dev/sdc but this requires moving up to a more expensive plan from my cloud provider.
Any insight as to why this occurs