Ok, I figured out my own problem. The minimum config needed is as follows-
#cloud-config
users:
- name: ansuser
lock_passwd: false
passwd:
$6$TcX2D/LcPtq/a$m6AKlcIbZXL9ZJGNSgeXjnKGsz98Yw.v7rt5m18zunittqjMTygf7KLliwxXwzFrvj8rrFpOMGZmUYoX.mWib.
Without the lock_passwd parameter the account was created but locked. I figured that out
after adding a root account and logging in to review /etc/passwd and /etc/shadow.