It sounds like there might a problem with the recent change to BuildKit, but I can’t reproduce it, so I’m not certain.
Do you know what version last worked for you? Maybe try downgrading to the release just before the BuildKit change (0.1.158) and see if that unblocks you, like this. Note that flyctl will attempt to upgrade itself if it’s out of date, so you’ll need to disable that until you’re back on latest w/ fly settings autoupdate disable