In install-config.yaml, specify diskEncryptionSet under dataDisks.managedDisk

compute:
- architecture: amd64
  hyperthreading: Enabled
  name: worker
  platform:
    azure:
      type: Standard_DC4ads_v5
      dataDisks:
      - cachingType: ReadWrite
        diskSizeGB: 256
        lun: 1
        nameSuffix: vardisk
        managedDisk:
          diskEncryptionSet:
            id: /subscriptions/53b8f551-f0fc-4bea-8cba-6d1fefd54c8a/resourceGroups/jima-test-rg/providers/Microsoft.Compute/diskEncryptionSets/jima-test-des
  diskSetup:
  - type: user-defined
    userDefined:
      platformDiskID: vardisk
      mountPath: /var
  replicas: 3
controlPlane:
  architecture: amd64
  hyperthreading: Enabled
  name: master
  platform:
    azure:
      type: Standard_DC4ads_v5
      dataDisks:
      - cachingType: ReadWrite
        diskSizeGB: 256
        lun: 1
        nameSuffix: uddisk
        managedDisk:
          diskEncryptionSet:
            id: /subscriptions/53b8f551-f0fc-4bea-8cba-6d1fefd54c8a/resourceGroups/jima-test-rg/providers/Microsoft.Compute/diskEncryptionSets/jima-test-des
  diskSetup:
  - type: user-defined
    userDefined:
      platformDiskID: uddisk
      mountPath: /var/lib/containers
  replicas: 3

Got panic error:
$ ./openshift-install create manifests --dir ipi-ud-01/
INFO Credentials loaded from file "/home/fedora/.azure/osServicePrincipal.json" 
INFO Instance type Standard_DC4ads_v5 does not support Accelerated Networking. Using Basic Networking instead. 
panic: runtime error: invalid memory address or nil pointer dereference
[signal SIGSEGV: segmentation violation code=0x1 addr=0x0 pc=0x5699b3b]goroutine 1 [running]:
github.com/openshift/installer/pkg/asset/machines/azure.provider(0xc000bbf520, 0xc0019ff600, {0x122583a800?, 0x0?}, {0xa77e3d3, 0x10}, {0xc001a18b30, 0xf}, {0xa74171c, 0x6}, ...)
    /go/src/github.com/openshift/installer/pkg/asset/machines/azure/machines.go:268 +0xfbb
github.com/openshift/installer/pkg/asset/machines/azure.Machines({0xc001a18b30, 0xf}, 0xc0006d3b88, 0xc002006988, {0xc001b98300, 0x55}, {0xa74171c, 0x6}, {0xa77e3d3, 0x10}, ...)
    /go/src/github.com/openshift/installer/pkg/asset/machines/azure/machines.go:57 +0x475
github.com/openshift/installer/pkg/asset/machines.(*Master).Generate(0x259f3640, {0x20288668, 0xc001401a90}, 0xc0009b42d0)
    /go/src/github.com/openshift/installer/pkg/asset/machines/master.go:408 +0x212d
github.com/openshift/installer/pkg/asset/store.(*storeImpl).fetch(0xc00140f3b0, {0x20288668, 0xc001401a90}, {0x2025ef90, 0x259f3640}, {0x0, 0x0})
    /go/src/github.com/openshift/installer/pkg/asset/store/store.go:227 +0x6c5
github.com/openshift/installer/pkg/asset/store.(*storeImpl).Fetch(0xc00140f3b0, {0x20288668?, 0xc001401a90?}, {0x2025ef90, 0x259f3640}, {0x2599f840, 0x7, 0x7})
    /go/src/github.com/openshift/installer/pkg/asset/store/store.go:77 +0x4e
github.com/openshift/installer/pkg/asset/store.(*fetcher).FetchAndPersist(0xc000bd1bc0, {0x20288668, 0xc001401a90}, {0x2599f840, 0x7, 0x7})
    /go/src/github.com/openshift/installer/pkg/asset/store/assetsfetcher.go:47 +0x15d
main.newCreateCmd.runTargetCmd.func3({0x7ffc255e7536?, 0xa?})
    /go/src/github.com/openshift/installer/cmd/openshift-install/create.go:300 +0x6a
main.newCreateCmd.runTargetCmd.func4(0x259ac580, {0xc000bcf6a0?, 0x4?, 0xa7397e1?})
    /go/src/github.com/openshift/installer/cmd/openshift-install/create.go:314 +0x102
github.com/spf13/cobra.(*Command).execute(0x259ac580, {0xc000bcf660, 0x2, 0x2})
    /go/src/github.com/openshift/installer/vendor/github.com/spf13/cobra/command.go:1019 +0xa91
github.com/spf13/cobra.(*Command).ExecuteC(0xc0011ab808)
    /go/src/github.com/openshift/installer/vendor/github.com/spf13/cobra/command.go:1148 +0x46f
github.com/spf13/cobra.(*Command).Execute(...)
    /go/src/github.com/openshift/installer/vendor/github.com/spf13/cobra/command.go:1071
main.installerMain()
    /go/src/github.com/openshift/installer/cmd/openshift-install/main.go:67 +0x390
main.main()
    /go/src/github.com/openshift/installer/cmd/openshift-install/main.go:39 +0x168
 

     built from PR https://github.com/openshift/installer/pull/9706

    Always

    1. Configure dataDisks in install-config.yaml file and set dataDisks.managedDisk.diskEncryptionSet
    2. Install cluster
    3.
    

    Installation failed

    Installation is successful

From https://github.com/openshift/installer/blob/main/pkg/asset/machines/azure/machines.go#L267-L269, looks like a mixed up ManagedDisk.DiskEncryptionSet with ManagedDisk.SecurityProfile.DiskEncryptionSet, there should be two different encryption ways for data disk.