Well the log contains a clear message (for me):
Candidate host srh-02.rhev.lab.eng.brq.redhat.com (99501ea2-c165-42c2-bce3-a235ac6980f4) was filtered out by VAR__FILTERTYPE__INTERNAL filter Memory
We improved the logging so this seems to be already fixed. Can you check with the current 3.5 build?
Verified on ovirt-engine-3.5.0-0.0.master.20140804172041.git23b558e.el6.noarch
Error message:
Error while executing action:
test_mem:
Cannot run VM. There is no host that satisfies current scheduling constraints. See below for details:
The host alma06.qa.lab.tlv.redhat.com did not satisfy internal filter Memory because it has insufficient free memory to run the VM.