Ok!
I was able to solve my own problem.
It seems that for the bitcoin configurations to work, you need to add a [regtest] to the top of the bitcoin.conf. That will fix the error.
The change is in the Dockerfile
$‘rpcuser=foo\nrpcpassword=bar\nrpcport=8332\nregtest=1\nrelaypriority=0\nrpcallowip=127.0.0.1\nrpcconnect=127.0.0.1\n’ > /root/.bitcoin/bitcoin.conf \
becomes
$‘[regtest]\nrpcuser=foo\nrpcpassword=bar\nrpcport=8332\nregtest=1\nrelaypriority=0\nrpcallowip=127.0.0.1\nrpcconnect=127.0.0.1\n’ > /root/.bitcoin/bitcoin.conf \
I’ve also sent a Pull Request with the fix