I hit the same problem after installing and trying to use lxc.  It was
previously working properly on the same host machine.  Could it be that
lxc changes the mount options on the host's /dev/pts?  (I'm not sure
that was precisely the cause though.)

** Also affects: lxc (Ubuntu)
   Importance: Undecided
       Status: New

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chardev: opening backend "pty" failed
https://bugs.launchpad.net/bugs/607636
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