Problem solve:
Indeed the boot arg is not default edited by the make script on the PYNQ.
I not even notice this is the case as once it stuck I had no idea how I can get the log why and what reason it is stucking.
Maybe Sarunas you can advise a bit how we can debug the root cause it is stuck.
Starting Samba NMB Daemon...
Starting OpenBSD Secure Shell server...
Starting Permit User Sessions...
[ OK ] Started Unattended Upgrades Shutdown.
[ OK ] Finished Permit User Sessions.
[ OK ] Started Getty on tty1.
[ OK ] Started PYNQ X11 Server.
[ OK ] Started Serial Getty on ttyPS0.
[ OK ] Reached target Login Prompts.
PYNQ Linux, based on Ubuntu 20.04 pynq ttyPS0
pynq login: xilinx (automatic login)
Welcome to PYNQ Linux, based on Ubuntu 20.04 (GNU/Linux 5.4.0-xilinx-v2020.2 aarch64)
The programs included with the PYNQ Linux system are free software;
the exact distribution terms for each program are described in the
individual files in /usr/share/doc/*/copyright.
PYNQ Linux comes with ABSOLUTELY NO WARRANTY, to the extent permitted by
applicable law.
To run a command as administrator (user "root"), use "sudo <command>".
See "man sudo_root" for details.
xilinx@pynq:~$