Thanks so much @Lazarus535
I found that for me adding the following to my docker command worked:
--volume="$HOME/.Xauthority:/root/.Xauthority:rw"
I found this trick here
EDIT:
As Lazarus pointed out correctly you also have to set the --net=host option to make this work.

I don’t think you’re going to find a way to do this short of running an ssh daemon inside the container.

Here’s a basic example of how to do it that way though:

https://gist.github.com/udkyo/c20935c7577c71d634f0090ef6fa8393

Solution that worked for me

First of all the linked Microsoft Article is only valid for windows container. This Article explains very well how docker networks work.

To simplify the explanation i drew a simple example.Simple ssh into docker network.

To be able to reach a container in bridged networks one is required to expose the necessary ports explicitly.

1. Expose Port

   docker run -p 22 {$imageName}

2. Find Port mapping on host machine

   CONTAINER ID IMAGE COMMAND CREATED STATUS PORTS NAMES a2ec2bd2b53b renderfehler/omnet_ide_baseimage "/sbin/my_init" 17 hours ago Up 17 hours 0.0.0.0:32773->22/tcp tender_newton

3. ssh onto container using mapped port

   ssh -p 32772 [email protected]

It looks like you're doing all of the same stuff I'm doing EXCEPT you're sharing the .Xauthority at the time of container creation. That means if you ever ssh -X into your machine after creating the container the .Xauthority will not be valid anymore. You can't ssh -X from another terminal into the same machine and go back and use the .Xauthority, ssh -X changes the .Xauthority every time for the most recent terminal. I've only got it to work by copying the .Xauthority every time I ssh -X into my machine and try and share the screen with my container.

note: I'm sharing a device and a machine id because I was forwarding a webcam output

1.Create the container and tell xhost to allow forwarding from container id:

sudo docker run -it -d \
    --net=host \
    --env="DISPLAY" \
    --env="QT_X11_NO_MITSHM=1" \
    --volume="/tmp/.X11-unix:/tmp/.X11-unix:rw" \
    --device="/dev/video0:/dev/video0" \
    --volume="/path/to/your/sharedDockerFiles:/root/sharedDockerFiles" \
    --volume="/etc/machine-id:/etc/machine-id" \
    yourdockerrepo/image:tag \
    bash
export containerId=$(docker ps -l -q)
sudo xhost +local:`sudo docker inspect --format='{{ .Config.Hostname }}' $containerId`
sudo docker start $containerId

2.Copy .Xauthority from host home to sharedDockerFiles directory:

sudo cp ~/.Xauthority /path/to/your/sharedDockerFiles

3.Start and attach your container

4.Copy the .Xauthority in your shared folder to your container home

sudo cp /root/sharedDockerFiles/.Xauthority ~/

5.(necessary once): Edit container's /etc/ssh/ssh_config under Host * to include:

   ForwardX11 yes
   X11Forwarding yes

6.Restart your container and reattach and run GUI app

7.If you still have problems, make sure $DISPLAY variable in the container is the same as the host's

echo $DISPLAY #do this in the container
exit
echo $DISPLAY #do this in the host, should be the same as container's
#if they aren't equal, start container and:
export DISPLAY= #put the output of your host's $DISPLAY variable here

You need to resolve these things for it to work:

1. That the X application can find the X server
   • For SSH there needs to be a tunnel ("ssh -X" and "X11Forwarding yes" in /etc/ssh/sshd_config)
   • The address must be in $DISPLAY (using -e). You must replace "localhost" with the actual IP address of the Docker host seen from the Docker container.
2. That the X application is authorised to talk to the X server
   • Propagate the xauth magic cookie into the Docker container
   • Open up any firewall ports from the Docker host to the Docker container for the X11 port
   • Make sure the SSH server is configured to accept X11 TCP connections on a remote IP.

See my question (and answer) here on StackOverflow for details of how it can be done: https://stackoverflow.com/questions/48235040/run-x11-application-in-a-docker-container-reliably-on-a-server-connected-via-ssh

Inside the container localhost points to the container not the host VM, you need to set the DISPLAY environment variable to point to the host VM's IP address, not localhost:10.0

Alternatively you could try binding to the container to the host network.

EDIT: yeah, just checked, the ssh process when doing X forwarding binds port 6010 (what DISPLAY=localhost:10 maps to) to localhost so there is no way to reach it from inside the container if it's in it's own network namespace.

I suggest you add -net host to the docker run command which should give it access to the same loop back interface as the host VM.