I think the keying permissions are OK now; however ceph-disk tries to double zap the block device resulting in:

2017-10-20 16:07:45 INFO juju-log mon:1: osdize cmd: ['ceph-disk', 'prepare', '--dmcrypt', '--fs-type', u'xfs', '--zap-disk', '--filestore', u'/dev/vdb']
2017-10-20 16:07:46 DEBUG mon-relation-changed Creating new GPT entries.
2017-10-20 16:07:46 DEBUG mon-relation-changed Setting name!
2017-10-20 16:07:46 DEBUG mon-relation-changed partNum is 4
2017-10-20 16:07:46 DEBUG mon-relation-changed REALLY setting name!
2017-10-20 16:07:46 DEBUG mon-relation-changed The operation has completed successfully.
2017-10-20 16:07:46 DEBUG mon-relation-changed mke2fs 1.42.13 (17-May-2015)
2017-10-20 16:07:46 DEBUG mon-relation-changed Creating filesystem with 10240 1k blocks and 2560 inodes
2017-10-20 16:07:46 DEBUG mon-relation-changed Filesystem UUID: d3dd2964-ea6c-4812-8218-3264dbfd6406
2017-10-20 16:07:46 DEBUG mon-relation-changed Superblock backups stored on blocks:
2017-10-20 16:07:46 DEBUG mon-relation-changed  8193
2017-10-20 16:07:46 DEBUG mon-relation-changed
2017-10-20 16:07:46 DEBUG mon-relation-changed Allocating group tables: 0/2^H^H^H   ^H^H^Hdone
2017-10-20 16:07:46 DEBUG mon-relation-changed Writing inode tables: 0/2^H^H^H   ^H^H^Hdone
2017-10-20 16:07:46 DEBUG mon-relation-changed Creating journal (1024 blocks): done
2017-10-20 16:07:46 DEBUG mon-relation-changed Writing superblocks and filesystem accounting information: 0/2^H^H^H   ^H^H^Hdone
2017-10-20 16:07:46 DEBUG mon-relation-changed
2017-10-20 16:07:47 DEBUG mon-relation-changed creating /var/lib/ceph/osd-lockbox/94bad3e2-b9a3-45d8-aa9f-7bae30a36167/keyring
2017-10-20 16:07:47 DEBUG mon-relation-changed added entity client.osd-lockbox.94bad3e2-b9a3-45d8-aa9f-7bae30a36167 auth auth(auid = 18446744073709551615 key=AQBSH+pZetCjNxAAeJ2OsQ8y1dIreKEjdwkCXQ== with 0 caps)
2017-10-20 16:07:47 DEBUG mon-relation-changed creating /var/lib/ceph/osd-lockbox/94bad3e2-b9a3-45d8-aa9f-7bae30a36167/osd_keyring
2017-10-20 16:07:47 DEBUG mon-relation-changed added entity osd.0 auth auth(auid = 18446744073709551615 key=AQBSH+pZpYkSMxAAWXV25MOEBx2ghn2KN9JmkQ== with 0 caps)
2017-10-20 16:07:48 DEBUG mon-relation-changed Warning: The kernel is still using the old partition table.
2017-10-20 16:07:48 DEBUG mon-relation-changed The new table will be used at the next reboot or after you
2017-10-20 16:07:48 DEBUG mon-relation-changed run partprobe(8) or kpartx(8)
2017-10-20 16:07:48 DEBUG mon-relation-changed The operation has completed successfully.
2017-10-20 16:07:48 DEBUG mon-relation-changed wipefs: error: /dev/vdb5: probing initialization failed: Device or resource busy
2017-10-20 16:07:48 DEBUG mon-relation-changed ceph-disk: Error: Command '['/sbin/wipefs', '--all', '/dev/vdb5']' returned non-zero exit status 1
2017-10-20 16:07:48 ERROR juju-log mon:1: Unable to initialize device: /dev/vdb
2017-10-20 16:07:48 DEBUG mon-relation-changed Traceback (most recent call last):
2017-10-20 16:07:48 DEBUG mon-relation-changed   File "/var/lib/juju/agents/unit-ceph-osd-0/charm/hooks/mon-relation-changed", line 541, in <module>
2017-10-20 16:07:48 DEBUG mon-relation-changed     hooks.execute(sys.argv)
2017-10-20 16:07:48 DEBUG mon-relation-changed   File "/var/lib/juju/agents/unit-ceph-osd-0/charm/hooks/charmhelpers/core/hookenv.py", line 768, in execute
2017-10-20 16:07:48 DEBUG mon-relation-changed     self._hooks[hook_name]()
2017-10-20 16:07:48 DEBUG mon-relation-changed   File "/var/lib/juju/agents/unit-ceph-osd-0/charm/hooks/mon-relation-changed", line 468, in mon_relation
2017-10-20 16:07:48 DEBUG mon-relation-changed     prepare_disks_and_activate()
2017-10-20 16:07:48 DEBUG mon-relation-changed   File "/var/lib/juju/agents/unit-ceph-osd-0/charm/hooks/mon-relation-changed", line 375, in prepare_disks_and_activate
2017-10-20 16:07:48 DEBUG mon-relation-changed     config('bluestore'))
2017-10-20 16:07:48 DEBUG mon-relation-changed   File "lib/ceph/utils.py", line 1367, in osdize
2017-10-20 16:07:48 DEBUG mon-relation-changed     bluestore)
2017-10-20 16:07:48 DEBUG mon-relation-changed   File "lib/ceph/utils.py", line 1425, in osdize_dev
2017-10-20 16:07:48 DEBUG mon-relation-changed     subprocess.check_call(cmd)
2017-10-20 16:07:48 DEBUG mon-relation-changed   File "/usr/lib/python2.7/subprocess.py", line 541, in check_call
2017-10-20 16:07:48 DEBUG mon-relation-changed     raise CalledProcessError(retcode, cmd)
2017-10-20 16:07:48 DEBUG mon-relation-changed subprocess.CalledProcessError: Command '['ceph-disk', 'prepare', '--dmcrypt', '--fs-type', u'xfs', '--zap-disk', '--filestore', u'/dev/vdb']' returned non-zero exit status 1