I've been facing the same problems and was about to create an issue (but I've no time this week-end). Don't worry, you can install applications, but the name and the password that you give to create the container seem useless.

If you have a container in the GUI, delete it to be sure there was no problem when you closed the screen. Swipe the name of the container to the right and hit the "trashcan". When you see "Get started" create a new container and let it do its job. To see what's happening, swipe the container name to the left and hit "information" then "view" if necessary and go down to see the log. Wait until completion ...!

Once it's over, the GUI shows the name that you proposed but you have now a clean container named "xenial". Install for example gnome-system-monitor (good tool to see what's happening on you phone). Hit the spinning wheel to see the log as above and wait until completion ...!

Enjoy
Pulsar33

See it working in this subject for example