Terraform Azure: create a Linux VM from packer image and external data disk

First of all, you can create the Azure VM from a custom image through Terraform, no matter how do you create the image, Packer or other ways, more details see To provision a Custom Image in Terraform.

But when you use the custom image and want to encrypted data disk, the problem is coming.

Disk encryption is not currently supported in the use of custom Linux images.

More details see Requirements and limitations of Encryption.

In addition, to mount the data disk to the VM, I think you can use the VM extension to achieve that. And attach the managed data disk to VM, you can just add the storage_data_disk block in the VM configuration of Terraform code like this:

resource "azurerm_virtual_machine" "main" {
  name                  = "${var.prefix}-vm"
  location              = "${azurerm_resource_group.main.location}"
  resource_group_name   = "${azurerm_resource_group.main.name}"
  network_interface_ids = ["${azurerm_network_interface.main.id}"]
  vm_size               = "Standard_DS1_v2"

  # Uncomment this line to delete the OS disk automatically when deleting the VM
  # delete_os_disk_on_termination = true


  # Uncomment this line to delete the data disks automatically when deleting the VM
  # delete_data_disks_on_termination = true

  ...

  storage_data_disk {
    name          = "datadisk0"
    vhd_uri       = "${azurestack_storage_account.test.primary_blob_endpoint}${azurestack_storage_container.test.name}/datadisk0.vhd"
    disk_size_gb  = "1023"
    create_option = "Empty"
    lun           = 0
  }

  ...

  tags {
    environment = "staging"
  }
}

EDIT

I am afraid you need to use the custom image id in the vm storage_image_reference. You could use the data azurerm_image to refer your custom image in your group. The code like this:

data "azurerm_image" "custom" {
    name = "your_custom_image_name"
    resource_group_name = "your_group"
}

resource "azurerm_virtual_machine" "main" {
    ...

    storage_image_reference {
        id = "${data.azurerm_image.custom.id}"
    }

    ...
}