New commit detected on ManageIQ/manageiq/darga:
https://github.com/ManageIQ/manageiq/commit/520307b40a1f75863c6b431d12d17f2525bd8aa1

commit 520307b40a1f75863c6b431d12d17f2525bd8aa1
Author:     Greg McCullough <gmccullo@redhat.com>
AuthorDate: Fri Sep 9 16:28:53 2016 -0400
Commit:     Oleg Barenboim <chessbyte@gmail.com>
CommitDate: Mon Sep 12 10:22:17 2016 -0400

    Merge pull request #11132 from bzwei/azure_new_resource_group
    
    Takes new_resource_group when resource_group is blank
    (cherry picked from commit a12a0611f6f211f894fd09bd0c02a2c38fb42c26)
    
    https://bugzilla.redhat.com/show_bug.cgi?id=1375205

 .../orchestration_service_option_converter.rb       |  2 +-
 .../orchestration_service_option_converter_spec.rb  | 21 +++++++++++++++++++++
 2 files changed, 22 insertions(+), 1 deletion(-)
 create mode 100644 spec/models/manageiq/providers/azure/cloud_manager/orchestration_stack/orchestration_service_option_converter_spec.rb

I can share the testing with sshveta.

darga/yes
https://github.com/ManageIQ/manageiq-ui-self_service/pull/130

darga/backported
https://github.com/ManageIQ/manageiq-ui-self_service/pull/130

If you don't supply a resource group, but leave existing and new blank, then you get this error.

[] {"message":"No HTTP resource was found that matches the request URI 'https://management.azure.com/subscriptions/9ee63d8e-aee7-4121-861c-d67a5b8d231e/resourcegroups?api-version=2016-09-01'."} (cause: 404 Not Found) (MiqException::MiqOrchestrationProv...

Are we supposed to be substituting the New Resource Group name with the Stack or VM name?  Can you take a look and see if this looks like what you were expecting?
https://10.16.7.89/self_service/requests/922000000000002

No VM or Resource group ever appeared in Azure.

Because no existing resource group is selected, we will take the new resource group value. The provider raises the observed error on an empty (new) resource group. This is expected. 

However you can open an RFE bug if we want to raise an error sooner than later.

Per discussion, this is working correctly.  I agree, you have to fill out the form.  Moving to verified.

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://rhn.redhat.com/errata/RHSA-2016-1996.html