This bug was fixed in the package systemd - 204-5ubuntu20.24

---------------
systemd (204-5ubuntu20.24) trusty; urgency=medium

  [ Thomas Voß ]
  * Do not create /run/nologin, and thus make sure deputy systemd does not
    prevent system logins. LP: #1660573.

systemd (204-5ubuntu20.23) trusty; urgency=medium

  * d/p/0001-libudev-util-change-util_replace_whitespace-to-retur.patch,
    d/p/0002-udev-event-add-replace_whitespace-param-to-udev_even.patch,
    d/p/0003-udev-rules-perform-whitespace-replacement-for-symlin.patch:
    Cherry-pick upstream fixes from Dan Streetman <ddstr...@ieee.org> to
    fix by-id symlinks for devices whose IDs contain whitespace.
    LP: #1647485.

 -- Dimitri John Ledkov <x...@ubuntu.com>  Thu, 02 Feb 2017 10:29:19
+0000

** Changed in: systemd (Ubuntu Trusty)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/1660573

Title:
  "system is booting up" while trying to log in after installing snapd
  on ubuntu 14.04

Status in snapd:
  Invalid
Status in systemd package in Ubuntu:
  Invalid
Status in systemd source package in Trusty:
  Fix Released

Bug description:
  [Impact]

   * Deputy systemd sometimes wrongly prevents TTY logins
   * Since it is deputy systemd, it should not be controlling PAM stack nologin 
feature, i.e. deputy systemd should not create /run/nologin since it's not 
removing it reliably.

  [Test Case]

   * On boot, /run/nologin should not exist
   * Logins should not be prevented

  [Regression Potential]

   * This impacts systems with snapd and deputy systemd only (not the
  default configuration)

  [Original Descriptions]

  I've installed snapd on an up-to-date Ubuntu 14.04 server system
  running LTS enablement kernel.

  After toying with snapd and some simple snaps I logged out (so far everything 
was OK).
  I returned to the console after a while (I'm not sure if I logged out but I 
suspect I had to) and I saw the login prompt. After entering my username a line 
was printed "System is booting up" and I was kicked back ot the login prompt 
(It never asked for my password).

  After rebooting the problem went away.

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