I haven't dug too much into that, but I think the LSB image simply doesn't have the necessary environment built. That includes the clloader program (which receives and runs sketches. It also responds to sketch reset button presses, so that's why it doesn't work for you now.
Generally, you can run the sketch manually. You just need to redirect the stdin and stdout + pass two command-line parameters, where Serial and Serial1 objects are mapped. There was a topic on this forum where we've discussed that, just search for it.
Alternatively you can try building the clloader for eglibc-based image and see if that builds at all, then include it into the image. But that would require preparing teh full Yocto build environment per the BSP Build Guide, which may be time-consuming. If you go that way - try running "bitbake galileo-target" and see what happens.