The “cannot watch conf/bblayers.conf files WD=-1” message that you’re getting is related to the “no space left on device” error. Once you get rid of that error I believe the system will be able to read the bblayers.conf file normally. Also, did you make sure to have enough space on your computer to complete the process? Remember that you need up to 80GB so have that in mind.
Could you please share the steps you’re following?
The error I think is caused by the inotify system. It provides real-time notifcation of file changes by adding watches to files.
I have never met this problem when bitbaking the Yocto image, more likely, you have some other applications abusing a big number of watches.
You can increase the maximum number, but only to a limit, because it all goes from kernel memory.
As a start, you can check the present maximum with:
A workaround is to increase it with:
sudo sysctl fs.inotify.max_user_watches=<bigger value>
but it is only the sympthom. It would be safer to find what is consuming it.
(AFAIK dropbox tends to do so...)