This is weird. The error you are getting indicates that the offending script (
init_workspace.bash) has Windows-style endings which is certainly not the case: I'm running everything on Ubuntu, including Docker etc. Just to be sure I double checked the local copy of that file and it has proper Unix line endings (i.e. \n only).
Unfortunately I don't have an experience running Docker on Windows but here is an idea: check your Git settings to make sure that there is no automatic line ending conversion going on. AFAIR, when Git is installed on Windows, this conversion option is enabled by default. Search for
core.autocrlf, try changing the setting and try again.
Hope this helps, let me know if you still have problems building the container.
P.S. Don't forget to delete your existing
erle-sim image/container just in case before you build a new one.