Are you sure it’s an infinite loop? Might just be the magic happening. With a clean TPM 2.0 and secure boot enabled, it took some additional reboot(s) (I didn’t count them). When it says “Press Enter to configure” (or similar) and you press Enter, it will probably come back with saying something like “Kernel is updating”, the next time around it will say a reboot is pending. I guess that’s required for the TPM-backed FDE setup. Eventually you should get to the point where you supply your email address, though. It is a bit counterintuitive, I’ll give you that.
Nah, I think those are just issues one encounters with VM’s. You could also just sudo dd if=/path/to/ubuntu-core-26-amd64.img of=/dev/disk/by-id/usb-<stick>[1] on the host machine and boot your home server from that USB stick; perhaps unplug any internal storage, just to be safe.