This is a slightly more thoughtful, but still suffers from "stuff" obsession. Freedom of Association has little to do with "stuff" or property and is a source of conflict that cannot be resolved with "stuff" or property.
Freedom of association comes down to property. If I'm in your store, I have limited my freedom of association because I have to interact with the people you allow into your store. If I'm on my own property, I have complete freedom of association because I can limit who enters my property.
The only property based solution is partition and segregation. Spiraling conflict is the natural result in any case. How does Libertarianism deal with conflict?.. It doesn't.
I agree that if you had people who generally believe that racism and sexism are unacceptable and you also had people who wished to practice those kinds of discrimination, conflict would be inevitable. I already explained exactly how that conflict would work -- the non-racist, non-sexist folks would likely isolate themselves from the racists and sexists.
If a bunch of racist people want to live together and be racists, that's fine. I'm willing to live and let live. I will despise them, refuse to deal with them, and refuse to deal with those who deal with them. But I'm willing to let them do that in exchange for them allowing me to have integrated water fountains even if they'd prefer separate ones.
At least the racists can't use the machinery of government to enforce segregation or discrimination, as has happened in pretty much every Democracy.