Quick q: I got the output at the bottom... The command fails but the start succeeds after that anyway if you look at serial.log. Is there a timeout flag of some sort I can use?

INFO[0000] Terminal is not available, proceeding without opening an editor
INFO[0000] Attempting to download the image from "<https://yum.oracle.com/templates/OracleLinux/OL8/u6/x86_64/OL8U6_x86_64-kvm-b126.qcow>"  digest=
INFO[0000] Using cache "/Users/vguruswa/Library/Caches/lima/download/by-url-sha256/35f305085158790bc721937e5951d39e295d04378b53ea054568b53883c05a43/data"
INFO[0000] Attempting to download the nerdctl archive from "<https://github.com/containerd/nerdctl/releases/download/v0.22.2/nerdctl-full-0.22.2-linux-amd64.tar.gz>"  digest="sha256:2b4a099fbc30bd9959b0034f3c3e73a011ea8c76aa7e20139862313aef576e61"
INFO[0000] Using cache "/Users/vguruswa/Library/Caches/lima/download/by-url-sha256/dcf17205e4f1c03637d803a93cb214a13ebe4021f1f55587be07b73f4848adb3/data"
INFO[0002] [hostagent] Starting QEMU (hint: to watch the boot progress, see "/Users/vguruswa/.lima/oracledb/serial.log")
INFO[0002] SSH Local Port: 55893
INFO[0002] [hostagent] Waiting for the essential requirement 1 of 5: "ssh"
INFO[0087] [hostagent] Waiting for the essential requirement 1 of 5: "ssh"
INFO[0127] [hostagent] Waiting for the essential requirement 1 of 5: "ssh"
INFO[0137] [hostagent] Waiting for the essential requirement 1 of 5: "ssh"
INFO[0145] [hostagent] The essential requirement 1 of 5 is satisfied
INFO[0145] [hostagent] Waiting for the essential requirement 2 of 5: "user session is ready for ssh"
INFO[0168] [hostagent] Waiting for the essential requirement 2 of 5: "user session is ready for ssh"
INFO[0178] [hostagent] The essential requirement 2 of 5 is satisfied
INFO[0178] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0222] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0263] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0304] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0345] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0386] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0427] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0468] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0509] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0551] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
INFO[0592] [hostagent] Waiting for the essential requirement 3 of 5: "sshfs binary to be installed"
FATA[0600] did not receive an event with the "running" status

Are you sure it succeeded and installed sshfs? Can you access the host filesystem from inside the VM?

I'll check the host VM access. Thanks