Lars Ekman writes:

When using "losetup" the device is always setup as Read-Only.

(I have only tested with the -o flag, but looking at the code the
 problem seems general)

The problem is the "opt" variable in "losetup.c" that is reused in
the "set_loop()" call. Clear it before the call and everything is OK;

  opt = 0;         /* <-------- added line */
  if (delete)
    return del_loop (argv[optind]) ? EXIT_SUCCESS : EXIT_FAILURE;
  else
    return set_loop (argv[optind], argv[optind + 1], offset, &opt)
      ? EXIT_FAILURE : EXIT_SUCCESS;
}

Best Regards,
Lars Ekman

util-linux/losetup.c

@@ -50,6 +50,7 @@ losetup_main (int argc, char **argv)
       || (!delete && optind + 2 != argc))
     bb_show_usage();
 
+  opt = 0;
   if (delete)
     return del_loop (argv[optind]) ? EXIT_SUCCESS : EXIT_FAILURE;
   else