It's right there at the very end:

NOTE: Exit code 127. Output:
/home/wlsom/YoctoCode/poky/build-microchip/tmp/work/sama5d27_wlsom1_ek_sd-poky-linux-gnueabi/utec-mcdgrill-image/1.0-r0/intercept_scripts-7f1ca27092c337bb8d06dfe7837dad99a9fb3e5e5ff266e8ce34762c23025acb/update_icon_cache: 9: /home/wlsom/YoctoCode/poky/build-microchip/tmp/work/sama5d27_wlsom1_ek_sd-poky-linux-gnueabi/utec-mcdgrill-image/1.0-r0/intercept_scripts-7f1ca27092c337bb8d06dfe7837dad99a9fb3e5e5ff266e8ce34762c23025acb/update_icon_cache: /home/wlsom/YoctoCode/poky/build-microchip/tmp/work/sama5d27_wlsom1_ek_sd-poky-linux-gnueabi/utec-mcdgrill-image/1.0-r0/recipe-sysroot-native//gdk-pixbuf-2.0/gdk-pixbuf-query-loaders: not found

This isn't easy to diagnose without having access to your build tree, but you can build plain core-image-sato for example and check that the binary does exist there and gets executed, and then untangle where the difference come from.

Alex