I have checked the app and the iso image - it still works fine.
I think the problem is on your side.
It was 313.8 MB
The squashfs is too small. Normal one is about 1.5GB, if you added more packages it has to be even bigger.
As small as 300MB can be CLI edition iso only.
So I think there is not a problem with xorriso:
but with building the new squashfs file (which is creating before iso image by xorriso):
So it looks like, in my way that making the new filesystem.squashfs file you have used all available disk space.
That's why it stopped working.
To unpack sparky full edition iso you need at least 5GB, to build a new iso you need another 2-5 GB extra space.
If you have added much more extra applications to the new iso, and for example you'd like to build 4GB iso image, you need about 15-20 GB of the space.
Let me know some more about your space you had when the app stopped working.
Anyway if it still is a bug, it can help me fix it, if now it will help you build a new iso image.